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SAN JOSE - Sanmina Corporation (NASDAQ: SANM), a notable player in integrated manufacturing solutions, has announced a definitive agreement to purchase the data center infrastructure manufacturing business of ZT Systems from AMD (NASDAQ: AMD). This acquisition, valued at $2.55 billion in cash and equity, along with an additional $450 million in contingent consideration, is aimed at bolstering Sanmina’s presence in cloud and AI infrastructure manufacturing. AMD, currently valued at $190 billion and recognized as a prominent player in the Semiconductors industry according to InvestingPro, has maintained strong revenue growth of 21.7% over the last twelve months.
The transaction, which is anticipated to be accretive to Sanmina’s non-GAAP EPS in the first year following closure, will integrate ZT Systems’ annual net revenue run-rate of roughly $5 - $6 billion. ZT Systems is recognized for its advanced liquid cooling capabilities and has manufacturing facilities in New Jersey, Texas, and the Netherlands. The acquisition is expected to double Sanmina’s revenue scale within three years.
Jure Sola, Chairman and CEO of Sanmina, stated that the acquisition positions the company as an industry leader in the cloud and AI ecosystem, enhancing its scale and deepening customer relationships. Sanmina aims to leverage ZT Systems’ manufacturing expertise to provide end-to-end solutions for hyperscalers and OEM customers.
Additionally, as part of the agreement, AMD will retain ZT Systems’ AI systems design businesses and establish a strategic partnership with Sanmina, making it a preferred new product introduction (NPI) manufacturing partner in the U.S. This collaboration is designed to accelerate the manufacturing and deployment of AMD’s AI rack and cluster-scale systems. AMD enters this partnership from a position of financial strength, with InvestingPro data showing a healthy current ratio of 2.8 and a conservative debt-to-equity ratio of 0.08, indicating strong operational flexibility.
Sanmina has secured committed financing of $2.5 billion from Bank of America for the acquisition, which is unanimously approved by Sanmina’s Board of Directors. The closure of the transaction is projected by the end of the 2025 calendar year, pending regulatory approvals and customary closing conditions.
The strategic move is set to enhance Sanmina’s capabilities across the entire product lifecycle and is expected to generate synergies through operational efficiencies. The inclusion of equity and long-term contingency in the consideration aligns the interests of Sanmina and AMD in their new partnership. For detailed analysis of AMD’s financial health, market position, and growth prospects, investors can access comprehensive research reports and over 15 additional ProTips through InvestingPro’s extensive coverage of major semiconductor companies.
The announcement was made in conjunction with a conference call hosted by Sanmina today, where further details were discussed. This news is based on a press release statement from Sanmina Corporation.
In other recent news, Advanced Micro Devices, Inc. (AMD) has announced a significant $6 billion share repurchase program, reflecting its strong financial position and commitment to returning value to shareholders. This new buyback plan supplements the $4 billion remaining from a previous authorization, bringing AMD’s total repurchase capacity to an estimated $10 billion. Furthermore, AMD has partnered with Saudi Arabia’s HUMAIN on a $10 billion AI infrastructure project, aiming to deploy 500 megawatts of AI compute capacity by 2026. This collaboration is expected to enhance AMD’s AI initiatives significantly.
Analyst firms have also weighed in on AMD’s prospects. Mizuho Securities raised its price target for AMD to $135, citing the company’s AI advancements and strategic partnerships as key growth drivers. Mizuho maintained an Outperform rating, emphasizing AMD’s robust product pipeline, including the upcoming MI355x products. Evercore ISI also maintained an Outperform rating with a $126 price target, highlighting AMD’s consistent strategy in the datacenter GPU market, which mirrors its successful server CPU approach.
In the microprocessor market, AMD experienced a slight decline in market share, dropping by 99 basis points to 21.1%, according to Mercury Research estimates. Despite this, AMD’s management remains confident in its long-term strategy, focusing on gradual market share growth across various segments. These developments underscore AMD’s strategic focus and financial strategies as it navigates the competitive semiconductor industry.
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