AMD Plans $4B Sale of Data Center Facilities

Industry sources reveal that AMD is in talks with several Asian companies regarding the sale of its data center manufacturing facilities, which it had previously agreed to acquire in 2024. Companies such as Compal Electronics, Inventec, Wistron, and Pegatron have reportedly shown interest in purchasing these facilities. The assets are estimated to be valued between $3 billion and $4 billion, including liabilities. The sale may be announced as early as the second quarter, though negotiations are still ongoing, and the final outcome remains uncertain.

In August 2024, AMD announced a $4.9 billion acquisition of ZT Systems, taking control of these manufacturing sites. Before the acquisition, ZT Systems had been a long-term AI server assembly partner for Inventec. AMD has previously stated that it plans to divest its manufacturing business to avoid competition with major customers such as Dell and HP.

Analysts Kunjan Sobhani and Oscar Hernandez Tejada had previously estimated that the value of the manufacturing unit could range between $1.5 billion and $3 billion. The server manufacturing business generated around $10 billion in revenue during the 12 months preceding AMD’s acquisition.

For potential buyers, this represents a strategic opportunity to acquire key server manufacturing facilities, crucial to the booming AI sector. Some of the facilities are located in New Jersey and Texas, which could be attractive due to their ability to circumvent tariffs and other measures enacted during the Trump administration aimed at bringing tech manufacturing back to the U.S.

Asian firms, including Foxconn (Hon Hai Precision Industry Co.), have long relied on Mexico as a key center for AI server assembly and parts production. However, in response to Trump’s threats of high tariffs on Mexican imports, companies have been increasing their investments in U.S. manufacturing operations. Since Trump's election victory in November, Foxconn has acquired land in the U.S., and its competitor, Quanta Computer, approved a $230 million capital increase for its U.S. subsidiary.

It is noteworthy that ZT Systems was a long-time partner of Inventec in AI server assembly, and Inventec held approximately a 10% stake in ZT Systems. After the acquisition by AMD, Inventec sold its stake, with the total transaction amounting to approximately NT$13.1 billion.

At present, AMD, Compal, Inventec, Wistron, and Pegatron have declined to comment on the matter.