Sanmina-SCI snaps up Newisys in boost for Opteron

Sanmina-SCI will purchase Newisys, a startup company that has gained attention by designing servers with Advanced Micro Devices’s (AMD’s) processors, Sanmina announced Thursday. Terms of the deal were not disclosed.

Newisys will become a subsidiary of Sanmina once the deal is completed, Sanmina said in a press release. The deal will add Newisys’ servers based on AMD’s Opteron and Athlon MP processors to Sanmina’s roster of enterprise servers and storage systems.

Sanmina manufactures PCs, servers, and storage systems for vendors such as IBM and others. Customers asked the San Jose, California, company earlier this year to start taking on more design responsibilities, and the Newisys acquisition will help accomplish that goal, said Michael Gibson, director of technical marketing for the enterprise computer and storage division at Sanmina.

The combination of Newisys’ technology and Sanmina’s manufacturing capabilities will encourage more server vendors to consider selling a Newisys Opteron server, said Phil Hester, chief executive officer and co-founder of Newisys. Many vendors liked Newisys’ designs, but were wary about working with a startup company, he said.

Sanmina will also be able to take advantage of Newisys’ design expertise in other types of servers, such as RISC (reduced instruction set computing) Unix servers, he said. “We have the broadest, deepest team in the industry to go work on any kind of server,” he said.

About 100 employees will remain with Newisys as part of the acquisition, but 20 people were laid off in sales, marketing, and manufacturing support, Hester said. Newisys will remain at its Austin, Texas, headquarters, he said.

Small to mid-tier systems builders will be most interested in marketing a Newisys/Sanmina server, said Gordon Haff, an analyst with Illuminata in Nashua, New Hampshire.

Large vendors often use third-party developers to get started with a type of server they are unfamiliar with, but eventually develop their own in-house designs, Haff said. This was how IBM got started in the blade server market, he said.

The news is positive for AMD’s Opteron processor, which is a key component in AMD’s strategy to become profitable, Haff said. “This indicates a certain confidence that a market (for Opteron) will develop in some kind of volume, and contract manufacturing companies are attuned to volume markets,” he said.

The ability to provide customers with choices beyond servers based on Intel Corp. processors was important to Sanmina, Gibson said. “We think the AMD processor fills a void in the market. (It) is a very powerful processor, and with this team focused on the AMD solution, it gives our customers another alternative,” he said.