AMD to Cut More Jobs in Latest Restructuring Effort

By Jeffrey Burt  |  Posted 2015-10-02 Print this article Print
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The chip maker continues to struggle with the continuing decline in the global PC market and the company's ongoing competition with Intel.

Advanced Micro Devices' struggles are continuing, with the chip maker adopting a restructuring plan that will include cutting about 5 percent of its workforce, or 500 jobs.

Unveiling the proposal Oct. 1 in a regulatory filing with the Securities and Exchange Commission, AMD noted the job cuts and added that the plan includes "organizational actions such as outsourcing certain IT services and application development."

Officials also said the restructuring was part of the chip maker's "ongoing efforts to simplify its business and align resources around its priorities of building great products and deepening customer relationships."

The company said in the filing it will take a $42 million charge for the restructuring plan, which includes the layoffs as well as the outsourcing efforts. Officials hope to save about $2 million in the third quarter and $7 million in fourth quarter, and $58 million in 2016.

AMD has about 9.500 employees.

The company has been hurt over recent years by the continued decline in global PC sales and its competition with its much larger and better-resourced rival Intel. In response, AMD executives have looked for ways to streamline the business and focus on particular possible growth areas in hopes of stabilizing the company's financial picture and return it to profitability.

A key challenge for AMD has been reducing its reliance on the PC market, which has seen shipments fall worldwide since 2012, due partly to the rise of mobile devices like smartphones and tablets and the lack of new systems that fuel the interest of consumers and business users. Analysts with IDC and Gartner expect 2016 to be another difficult year for the PC space, with a turnaround coming the following year as new systems armed with Intel's new "Skylake" processors and Microsoft's Windows 10 operating system ramp in the market.

Just a couple of years ago, about 90 percent of AMD's revenues came from PC chips, but officials have worked to diversify is portfolio. Last year, about 60 percent came from PCs, with the rest generated by such segments as semi-custom chips, the data center and the embedded market. The company made a splash in recent years by having its accelerated processing units (APUs)—which integrate the CPU and graphics technology on the same piece of silicon—used by Microsoft, Sony and Nintendo in their latest gaming consoles.

However, AMD is not abandoning the PC space. In a talk with financial analysts in May, CEO Lisa Su and other executives said the company will focus on higher-end systems, a point illustrated earlier this week with the launch of a refreshed portfolio of Pro A-Series processors aimed at commercial PCs, an important area for the company.

In a meeting with analysts and journalists in Sunnyvale, Calif., last month, Kevin Lensing, corporate vice president and general manager of AMD's Client Business Unit, said that despite the overall downward trend in PCs worldwide, there still is demand for business systems.

"The commercial market is strong," Lensing said. "There is little doubt that in the commercial environment, PCs will reign supreme."

AMD also is making some bets on new technologies, including High-Bandwidth Memory (HBM), which the company has been developing as part of a consortium for several years. HBM essentially stacks memory chips for greater performance, power efficiency and density. It is already in some discrete graphics cards and will appear in other products in the future.

The chip maker next year also will roll out a new x86 CPU core design, dubbed "Zen," which officials said will offer significant performance and efficiency improvements over current products. The Zen design, which has been in the works for two years, will find its way into chips for everything from PCs to servers.

AMD has undergone several restructuring efforts over the years, with layoffs and leadership changes. Most recently, Jim Keller, the chip architect who helped drive the effort behind Zen, in September left the company. In addition, AMD reportedly has talked with private equity firm Silver Lake Partners to sell 25 percent of its business. Silver Lake is the organization that helped Michael Dell take his namesake company private in 2013.



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