AMD Set to Sell Server Hardware Business to Taiwanese Investors

When AMD agreed to buy US server maker ZT Systems for $4.9 billion last summer, the original plan was to sell the US hardware assembly facilities to some new owners, likely to be found in Taiwan this half of the year.

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As Bloomberg notes, AMD is currently negotiating with Taiwanese manufacturers Compal Electronics, Inventec, Pegatron and Wistron to transfer ZT Systems’ production assets in the United States to them. Taking into account debt obligations, the deal amount could range from $3 billion to $4 billion. In essence, AMD would recoup a significant portion of the costs associated with the purchase of ZT Systems.

There is no need to explain why this deal is beneficial to Taiwanese equipment manufacturers after Donald Trump’s victory in the US presidential election. The customs duties he introduces are intended to attract foreign manufacturers to the country, and it is more profitable for the latter to acquire ready-made assets in order to quickly establish production for the American market inside the country. The deal with Taiwanese companies may be concluded by AMD in the second quarter of this year.

It is noteworthy that before the deal with AMD, ZT Systems had already cooperated with Inventec, and it is difficult to predict whether this experience will help to conclude a new deal. AMD itself is getting rid of its server equipment production capacities in order not to compete with its partners such as Dell and HPE. Some of the ZT Systems enterprises planned for sale are located in New Jersey and Texas. Taiwanese manufacturers of server equipment have traditionally manufactured products for the American market in Mexico, but Trump is introducing duties on goods of Mexican origin, forcing companies to look for new sites in the United States. Such conditions will certainly allow AMD to sell these assets to its advantage.