AMD to axe 10 per cent of workforce

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Chip maker AMD has confirmed that it plans to cut its workforce by 10 per cent following a poor set for first quarter revenue estimates.

The company, currently the number two PC processor maker behind Intel, intends to let up to 1,600 staff go from a worldwide total of 16,800. AMD estimates that its revenue for the quarter ended 29 March will be about $1.5 billion (£750 million), well below the average analyst estimate of $1.62 billion (£810 million). It will report first-quarter results on 17 April.

AMD's expectations amount to a 22 per cent rise from the year-ago period, but a 15 per cent drop from the fourth quarter of 2007, in stark contrasts to the fortunes of its main rival.

The figures illustrate the tough time that AMD is having in the chip market, where it faces stiff competition from Intel and where it has struggled to repeat the previous successes of its Athlon and Opteron processors.

In October of 2007 it reported its fourth straight quarter of losses, while its September 2007 launch of the quad core Barcelona chip was blighted by the discovery of technical glitches in the processor. The company has also had to deal with the integration of graphics chip maker ATI, which it acquired in July 2006 for $5.4 billion (£2.7 billion).

At the end of March this year AMD launched a new desktop processor range called Phenom, which the company is hoping will enable it to claw back market share from Intel and its Core 2 line.

As a result of the job cuts, planned by the end of the third quarter, AMD expects to record an as-yet unspecified one-off restructuring charge in the second quarter.

"We have a cost structure that we need to reduce due to lower revenue expectations, which are occurring in uncertain market conditions." said AMD spokesman Drew Prairie.

AMD has its UK headquarters in Camberley, Surrey, and operates a chip manufacturing plan, known as a fab, in Dresden, Germany.

(Additional material from Reuters)

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