AMD (NASDAQ:AMD) is sharpening its competitive edge in the data center GPU market by shedding low-margin operations while retaining critical talent. The chipmaker has agreed to sell the manufacturing unit of ZT Systems to Sanmina Corporation (NASDAQ:SANM) in a $3 billion deal announced on May 19, comprised of $2.55 billion in cash and stock, plus up to $450 million in potential earnouts over the next three years.

This move comes less than a year after AMD acquired ZT Systems for $4.6 billion. From the beginning, AMD made clear its plan to offload ZT’s manufacturing operations and focus instead on its prized engineering resources. The retained 1,200-person engineering team—valued internally at approximately $1.6 billion—is viewed as a strategic asset in AMD’s push to challenge Nvidia (NASDAQ: NVDA) in the high-stakes AI and data center market.

Effectively, AMD is assigning a value of roughly $1.33 million per engineer, a price tag justified by their deep expertise in data center architecture and rapid hyperscaler deployment. These capabilities are considered essential as AMD seeks to close the execution gap with Nvidia’s dominant position in GPU infrastructure for artificial intelligence workloads.

“We think the ZT Systems acquisition positions AMD to improve its system integration and deployment timelines, making it more competitive with Nvidia in the hyperscale market,” said analysts at Citi in a research note. They had initially estimated a divestiture value closer to $5 billion, referencing valuation multiples from peers like Supermicro, which trades at 1.2 times trailing 12-month sales.

Under the agreement, Sanmina will pay $2.25 billion in cash, plus a $300 million premium split equally between cash and equity. If the transaction is terminated, AMD stands to collect a breakup fee of up to $153 million.

By streamlining its operations and doubling down on its engineering strengths, AMD is making a calculated bet that expertise – not just hardware – will define the next phase of the AI and data center race.

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