AMD Values ZT Systems Engineers at $1.33 Million Each

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AMD’s Strategic Divestment: A Game Changer for the Chipmaker

AMD’s recent divestment is garnering significant attention on Wall Street, emphasizing the company’s strategic shift towards a more efficient operational framework. By retaining the design of its rack-scale solutions in-house while outsourcing manufacturing to Sanmina, AMD is poised to enhance its financial standing.

Financial Details of the Sanmina Transaction

According to previous analyses, Sanmina is set to acquire AMD’s data center infrastructure and manufacturing business for a total of $2.25 billion in cash, alongside a $300 million premium split evenly between cash and equity, amounting to $150 million each. Furthermore, there is a contingent payment of $450 million linked to the acquired assets’ performance over the next three years. This agreement is projected to finalize by the end of 2025.

Valuation Insights from Citi Analysts

Recent insights from Citi shed light on the details of the agreement. AMD’s divestment transaction with Sanmina is anticipated to generate approximately $3 billion. However, it is noteworthy that AMD had acquired ZT Systems, from which these assets derive, for $4.6 billion. This leads to the implication that AMD values the remaining assets—primarily a team of 1, 200 engineers—at around $1.6 billion, translating to an impressive valuation of roughly $1.33 million per engineer.

AMD’s Future: Focus on Rack-Scale Solutions

Analyst Aaron Rakers from Wells Fargo suggests that AMD is shifting its focus towards next-generation rack-scale solutions to catalyze growth. Anticipated for release in 2026, the MI400 series of GPUs exemplifies AMD’s ambitions in this arena. Recent industry reports indicate that the forthcoming MI450 IF128 cluster will feature “128x GPU packages communicating at over 1.8TB/s unidirectional bandwidth per GPU, ”underscoring the innovative capabilities of these products.

Looking Ahead: Upcoming AI Initiatives

AMD’s strategy surrounding rack-scale solutions is expected to be further elaborated during its upcoming AI event in June, where the company will likely provide deeper insights into its vision and market positioning.

Collaboration with HUMAN

In a significant move, AMD is also partnering with HUMAIN, the AI-focused arm of the Saudi Public Investment Fund (PIF).Together, they are set to deploy 500 megawatts of AI computational capacity in Saudi Arabia within the next five years, highlighting AMD’s commitment to expanding its influence in the AI sector.

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