AMD warns on third-quarter results


— 6:00 AM on September 29, 2011

Late yesterday, AMD warned investors that its results for this year's third quarter will be lower than expected. The company previously said revenue would climb 8-12% from the second quarter to the third, and it forecast a third-quarter margin of "approximately 47%." Now, the company expects a 4-6% revenue increase and gross margin of 44-45%.

Interestingly, AMD lays the blame almost squarely on GlobalFoundries for the missed targets. Take a look:

The less-than-forecasted preliminary third quarter 2011 revenue results are primarily due to 32 nanometer (nm) yield, ramp and manufacturing issues at GLOBALFOUNDRIES in its Dresden, Germany factory that limited supply of "Llano". Additionally, 45nm supply was less than expected due to complexities related to the use of common tools across both technology nodes. AMD continues to work closely with its key partner GLOBALFOUNDRIES to improve 32nm yield performance in order to satisfy strong demand for AMD products.

The less-than-forecasted preliminary third quarter 2011 gross margin results are primarily due to less-than-expected supply of "Llano" and associated products with higher average selling price (ASP). Additionally, shipments of AMD's next-generation server processor, codenamed "Interlagos", occurred later in the third quarter than originally anticipated.

In other words, hiccups with the 32-nm ramp at GlobalFoundries purportedly prevented AMD from meeting demand for both Llano chips and earlier, 45-nm products. Oh, and Interlagos shipped too late—but that's no great revelation.

AMD says it will reveal its full third-quarter financials on October 27 after the market closes.

   
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