Chips are down as AMD announces job cuts and revenue losses

By John Leonard
19 Oct 2012 View Comments
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Chip maker Advanced Micro Devices (AMD) posted third-quarter revenue figures of $1.27 billion (£0.79bn), a 10 per cent decrease on Q2 figures, and a 25 per cent year-on-year decline. This was in line with revised guidance issued by the firm earlier this week.

AMD announced plans to cut 15 per cent of its workforce (about 1,800 people) and to restructure the business by consolidating sites. Most of the job cuts (which are less than the 30 per cent of the workforce predicted by many analysts) will take place in Q4. The firm says they will save $20m in that quarter and $190m in 2013.

Further reading

In November 2011 the company laid off 1,400 employees, and CFO Thomas Seifert left last month.

The steep decline in the PC market is blamed for AMD's predicament. In a statement, CEO Rory Read admitted that the rate of change had wongfooted the chip maker.

"It is clear that the trends we knew would reshape the industry are happening at a much faster pace than we anticipated. As a result, we must accelerate our strategic initiatives to position AMD to take advantage of these shifts and put in place a lower cost business model," he said.

The PC market is being challenged by alternative computing devices such as smartphones and tablets, as well as a stagnant global economy. In recent report, analyst IDC said that worldwide PC shipments fell by 8.6 percent year-on-year in the third quarter. Like other chip manufactures, AMD is struggling to adapt.

AMD also announced a $100m write off on existing stocks of its Llano chips, which have since been superceded by its new range based on the Trinity architecture, and the firm is rumoured to be cutting the prices of its Llano products accordingly.

Yesterday, rival chip manufacturer Intel announced a fall in revenues of 14 per cent year-on-year.

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