AMD (AMD, Financials) is reportedly in discussions to sell its server chip manufacturing plants in Asia, with a potential deal valued at around $4 billion, including debt, Bloomberg reported, citing sources familiar with the matter.
As AMD negotiates escalating rivalry in the artificial intelligence and data center sectors, the possible sale arises. Seeking to battle Nvidia (NVDA, Financials) and Intel (INTC, Financials) in the fight for supremacy in the AI-powered semiconductor arena, the business has been extending its AI-oriented product range.
Friday’s AMD share decline of 2.2% reflects more general market weakness. Reportedly scheduled for the second quarter, the transaction should enable the business to simplify its processes and devote more funds toward artificial intelligence and high-performance computers.
Located in New Jersey and Texas, the facilities at issue were purchased by AMD from ZT Systems in August 2024 for $4.9 billion. With ZT Systems’ knowledge of cloud computing solutions anticipated to assist expand AMD-powered AI infrastructure for cloud and business customers, the purchase was meant to boost AMD’s data center AI systems capabilities.
Bloomberg said that potential purchasers include electronics companies Compal Electronics, Inventec, Pegatron, and Wistron located in Taiwan. These businesses specialize in contract manufacturing for multinational technology corporations; owning AMD’s facilities will help them to increase their capacity for artificial intelligence and cloud-based servers.
Should the deal go through, it would fit AMD’s larger approach of emphasizing high-margin semiconductor research over production. Rivals like Nvidia have likewise turned more and more on contract manufacturers to produce chips so they may focus on research and design.
AMD has not released a formal comment on the claimed conversations.
This article first appeared on GuruFocus.