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Bad week for chip makers

Bad week for chip makers

By:  Howard Solomon  On: 19 Oct 2012 For: Computing Canada Creator
 

AMD announces layoffs with the goal of saving US $210 million, while Intel says profit and revenue dropped. Is it the global economic slowdown or the shift from PCs to tablets?

It wasn't a good week for AMD Inc. or Intel Corp. Both suffered declines in revenue, but it was AMD that was hardest hit and being forced to announce layoffs.
 
The company said it had a net loss of US$157 million for the third quarter, and immediately announced a restructuring including laying off 15 per cent of its workforce -- about 1,800 people -- with the goal of saving US$210 million by the end of next year.
 
Intel had a profit in the quarter of US$3 billion, but that was a drop as revenue was down. It still remains the CPU market leader for desktops and servers, but the company said it's being hurt by  the global economic slowdown. There may be more to it than that. Both companies are being hurt by the switch in buyer spending from PCs to smart phones, which are largely powered by chips from other companies.
 
 
 
What's worrisome for Intel, as this story points out, is that it doesn't expect huge sales in the next quarter of PCs running Microsoft's new Windows 8 operating system, which will be released Oct. 26.  Meanwhile this report notes that AMD sales have been down for a number of quarters.      
 
The instability of CPU sales this year is troubling for both companies, but Intel has the resources to weather it out. AMD has always been behind Intel in market share. It will take skilled leadership to right the ship.

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Howard Solomon Howard Solomon I'm assistant editor of ComputerWorld Canada covering network infrastructure, communications and government IT issues. An IT journalist  since 1997, I've written ... more

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