Advanced Micro Devices Inc. tries to minimize its expenses by firing nearly 1,400 workers because of a weak computer market and manufacturing delays. The said problem has hurt the world’s second-biggest maker of microprocessors for PCs.
The layoffs announced Thursday amount to around 12 percent of the company’s 12,000 workers and were among the first significant move by AMD’s new CEO, Rory Read, who got hired from Lenovo Group in August. The cuts are going to unfold over the following five months.
AMD struggles with an industry wide problem: PC sales growth, particularly in the U.S. and Europe, has been feeble because of the weak economy and rivalry from smartphones and tablets.
Although PC shipments continually growing, the pace is slowing sharply — and too much of market research firms IDC and Gartner Inc. expected. The unexpected weak economy has raised fears the strength of the market going into the holiday shopping season.
Most of AMD’s business is in chips for PCs. It does not have a significant presence in smartphones and tablets.
Read’s job in large part is to help devise a strategy for AMD, so that they could penetrate computing markets where its rival Intel Corp. have largely not presented. The battle is now on a different level as AMD’s and Intel’s market share in PCs has attained a steady balance for years — Intel’s chips are in around 80 percent of the world’s PCs, and AMD’s are in essentially the rest.
Because AMD does not have any presence in the mobile devices, AMD got no chance against its rival, Intel because of its smaller size, and it was a key reason AMD expelled Read’s predecessor, Dirk Meyer, in January.
In some ways, Meyer got his excuse. He was the orchestrator of the triage since he manages the company’s spinoff of its manufacturing operations, as the same time as fending off Intel and overseeing the introduction of a significant new chip for AMD. That the chip can process modern graphics and general data on the same piece of silicon, a technical achievement.
In the meantime, the rise of mobile devices benefits chip makers such as Qualcomm Inc. and Texas Instruments Inc., whose processors designed in a way that it can only consume less power.
Several financial struggles have led to several rounds of layoffs at AMD in recent years. Back in 2008 and 2008, they have to let go of more than 3,300 workers.
The company the layoffs and other, unspecified operational changes would result to saving $200 million in 2012. A company spokesman said is separation benefits are going to vary based on location and local laws.