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AMD announces the job cuts after a brutal Q1 earnings announcement

After confirming it had to reduce expenses, AMD recently announced that it will cut 430 jobs worldwide, which is 2.6% of its workforce.  Around 40 jobs will be cut in AMD's Sunnyvale and Santa Clara, CA offices; 80 jobs in Austin, TX; around 12 in Boston, MA; and 50 in Markham, Ontario.  No workers in Dresden, Germany, location of AMD chip-making facilities, will be laid off. 

The remainder of the job cuts will be spread throughout AMD offices and manufacturing locations around the world.  Most of the jobs will be from marketing, sales and administration, but several engineering jobs will also be cut.

The announcement comes after AMD Chief Executive Hector Ruiz described AMD's recent performance as "unacceptable."  Ruiz said that as many as 800 jobs, the equivalent of 5% of AMD's workforce, would face possible elimination.

"There is no way to sugarcoat our performance in the first quarter," after the company posted a $611 million loss, said Ruiz.

Industry analysts are unsure if AMD will have to cut more jobs in the near future.  "I'm surprised the number is as small as what it is," said Brian Piccioni, a BMO Capital Markets analyst.

American Technology Research analyst Doug Freedman believes the job cuts could "save the company about $40 million per annum in operating expenses and add 8 cents to the bottom-line."

AMD recently detailed its desktop plans for the next year, which the company hopes will help it regain footing in the CPU market.  It recently unveiled Agena FX, a quad-core desktop CPU, and plans on unveiling Phenom FX next week. 

The company remains engaged in a brutal price cut war with Intel.  Intel slashed prices on the Core 2-family late last month, with deeper price cuts expected this summer.  In addition, Intel was able to neutralize an entire year of AMD marketshare gains in one quarter.

While Intel released the Core 2 Duo chip last year, AMD believes its Barcelona technology will offer better performance since it has four cores on a single die.

Intel recently also announced that it will cut another 1,000 employees at a plant where some employees worked on  200mm silicon wafers.

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By crystal clear on 5/13/2007 1:40:09 AM , Rating: 1
Here is some more speculation of Asset lite

AMD: asset-lite coming!

It looks like AMD has learned some things from the ATI acquisition in the form of using major foundries. Hector actually stated that in the conference call!

The difference here compared to the recent move by Texas Instruments is that leading-edge production will remain in-house at Fab 36 and later at Fab 38. Trailing-edge MPUs, which are a big part of the market and especially the ‘channel,' look like perfect products for shipping out to foundries.

This could give some great flexibility to AMD, who could hint that not only will they use Chartered Semiconductor more for 90nm devices, but that they could also use IBM's Building 323!

The fact that Fab36 is fully converted to 65nm and is not being affected by the $500 million capex cut means that we can expect continued ramp of dual- and quad-core for the rest of the year. This is important as this area is the server market honey pot.

The sacrifice being made is Fab 30. Basically, the rate of pace of the 200mm to 300mm conversion at the Dresden fab will slow, though it might be more likely that the pace will stop completely!

By KernD on 5/13/2007 9:10:32 AM , Rating: 2
This article seems to say that they will used Chartered to augment production, just like they did before, if the demand is greater than there production capacity. So asset-lite is just adding this to there own production. Building more fabs simply can't be done with the budged they have right now, they won't go fab-less.

They just can't afford to work like Intel and have enough fab and do a rotation of which fab has the most advanced process.
Maybe one day... but not today.

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