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AMD to cut 1,400 workers, new CEO's first big move

AMD to cut 1,400 workers, new CEO's first big move

By Associated Press | Updated: 6 June 2012 17:38 IST

Highlights

Advanced Micro Devices Inc. is cutting some 1,400 workers as a weak computer market and manufacturing delays have hurt the world's second-biggest maker of microprocessors for PCs.

Advanced Micro Devices Inc. is cutting some 1,400 workers as a weak computer market and manufacturing delays have hurt the world's second-biggest maker of microprocessors for PCs.

The layoffs announced on Thursday amounts to about 12 percent of the company's 12,000 workers and are the first big move by AMD's new CEO, Rory Read, who was hired from Lenovo Group in August. The cuts will unfold over the next five months.

AMD is struggling with an industrywide problem: PC sales growth, particularly in the U.S. and Europe, has been anemic because of the down economy and competition from smartphones and tablets.

Although PC shipments continue to grow, the pace is slowing sharply - and more than market research firms IDC and Gartner Inc. expected. That has raised concerns about the strength of the market going in to the holiday shopping season.

Most of AMD's business is in chips for PCs; it doesn't have a meaningful presence in smartphones and tablets.

Read's job in large part is to help devise a strategy for AMD to penetrate computing markets where it and rival Intel Corp. have been largely absent. The battle has taken on a new dimension as AMD's and Intel's market share in PCs has reached a steady balance for years - Intel's chips are in about 80 percent of the world's PCs, and AMD's are in essentially the rest.

Not having much presence in mobile devices has hurt AMD more than Intel because of its
smaller size and it was a key reason AMD ousted Read's predecessor, Dirk Meyer, in January.

Meyer in some ways had an excuse: He was orchestrating triage as he tried to manage the company's spinoff of its manufacturing operations while fending off Intel and overseeing the launch of an important new type of chip for AMD. That chip can process sophisticated graphics and general data on the same piece of silicon, a technical achievement.

The rise of mobile devices, meanwhile, is benefiting chip makers such as Qualcomm Inc. and Texas Instruments Inc., whose processors were designed to consume less power.

A variety of financial struggles has led to several rounds of layoffs at AMD in recent years. It let about 3,300 workers go in 2008 and 2009.

Contributing to Thursday's announcement were manufacturing problems that have postponed the shipment of AMD's newest chips, which it calls "accelerated processing units."

The layoffs and other unspecified operational changes are expected to save $200 million in 2012. A company spokesman said is severance benefits will vary based on location and local laws.

AMD shares increased 5 cents, or nearly 1 percent, to $5.78 in extended trading on Thursday after the cuts were announced.

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