AMD lowers wafer orders, will pay $320 million charge

We already know AMD suffered from both a slow CPU market and a decrease in market share last quarter. It’s no wonder, then, that the company says it has had to reduce its "wafer purchase commitments" with GlobalFoundries this quarter.

AMD doesn’t say how much the wafer orders were cut back, but it reveals the reduction will result in a "termination payment" of $320 million. AMD expects to spread the payment over several quarters, although a big, $165-million charge is going to show up in the company’s fourth-quarter results. (This wouldn’t be the first time AMD has taken a "one-time charge" related to GlobalFoundries. Those charges often go hand-in-hand with quarterly losses.)

AMD also says it plans to "reduce future reimbursements" to GlobalFoundries for "certain research and development costs."

According to Reuters, AMD CEO Rory Read doesn’t expect the PC market to recover from its current slump for "several quarters." As the news agency points out, AMD is making other cost-cutting moves to keep its head above the water. The company plans to sell and lease back its Austin campus, and it also announced plans to lay off 15% of its work force back in October.

Comments closed
    • pogsnet
    • 7 years ago
    • mnecaise
    • 7 years ago

    Layoffs and re-organization… CFO quits… Hiring consultants to “look at options”… More layoffs… Selling their campus… Writing off stock… Slashing orders from suppliers…

    I had been remaining positive about AMD’s future, personally. Up until now it seemed they were trying to manage their fiscal situation. It suddenly occurs to me these are the actions of a corporation trying to minimize its liabilities prior to being acquired.

      • sschaem
      • 7 years ago

      a) AMD is cleaning up its operation for a sale
      b) AMD is on death row and is doing anything and everything to live another day

      Personally I wouldn’t be surprised if Microsoft get a hold of AMD next year.
      They probably have 1.5 billion of royalty spread over the next 7 years just for the xbox product.
      MS is probably thinking 10 years from now, and see Apple as a dominating chip design house giving it the product advantage for tablet, phone, entertainment systems. (If anyone think Apple wont release new new itv, stay tuned)

      MS (like Apple) cant enter this new world without some kick-start acquisitions.

      AMD (ATI) is very close to MS, and if the rumors are true that MS might build an AMD APU tablet next year we might see the final catalyst.
      Xbox technology in tablets, unification of the computing platform, xbox gaming cards, saving 1+ billion in royalty, control of IP, etc.. etc..

    • Bensam123
    • 7 years ago

    oO

    You could discount a loooooot of CPUs for that much money. Visheras still aren’t selling for what they’re supposed to be. Knocking $20 off each CPU would definitely raise some eyebrows for people buying processors. Unless they’re selling them for close to ‘at cost’, which I highly doubt.

    A 8350 selling at $175 is a no brainer vs a 3570k selling for $220.

    There are a lot of really cool things you can do with overstock instead of simply eating a fee to have someone dispose of it (essentially what’s happening here). This was a really stupid move.

      • chuckula
      • 7 years ago

      You see.. I upthumbed you there for having a logical argument for your comment.

        • Bensam123
        • 7 years ago

        Consequently one against AMD, but you don’t thumb up my views against Intel (such as $/performance you probably marked down).

          • chuckula
          • 7 years ago

          No… I upthumb you when you show *logic*. If you were to post, for example, a pro-AMD statement about how it would behoove AMD to get in bed with a bunch of pro-audio and pro-video types to build a range of slick HTPC systems based on Trinity… where Trinity’s advantage in the GPU really shines… then I’d upthumb that too.

          You see… instead of just saying: “BUY AMD NO MATTER WHAT!” we have an argument where there is a clear advantage for AMD that can be stated without descending into name-calling, and a logical application of the advantage for AMD in an area where they could make some money.

          What I generally downthumb is when you go off on some rant about how Intel adding additional USB 3.0 ports to next-generation chipsets means that Intel is going to destroy all forms of upgradeability for all time and if we don’t all run out to buy AMD systems that either have fewer USB 3.0 ports or don’t have any at all, then the apocalypse is coming (you remember).

          Can you see the difference between the two arguments there?

            • Bensam123
            • 7 years ago

            My other posts showed logic, you just didn’t agree with it. Simply saying whatever you want and applying it to people doesn’t necessarily make what you say true, especially when you use ‘good will’ as leverage in order to manipulate whoever you’re talking to (which you did two posts up). One would make a correrlation between you trying to lecture me on thumbing after I pointed out that ‘real men dont down thumb people they don’t like’ in another post… at least you’re learning to be civil, even if you’re using it in a malicious way.

            I’m starting to question your ability to understand hypotheticals though. I’ve read something like 50% of the population are unable to properly engage in hypotheticals. Not necessarily understand what a hypothetical is, but are able to suspend disbelief in order to engage in a logical argument.

            Although when you accuse someone of ‘name calling’, the whole illusion falls apart and I realize again you just say whatever you want to make the other person seem wrong. You only started to engage in topics of conversation like that after I reamed you for being a complete and utter douchebag, which you still are, and you realized how bad it made you look. No amount of flowery posts or going ‘lolercopters you’re amazing, I wish I had good ideas like you *sucks dick*’ is going to make you a different person when there is someone like me to point out your true self.

            It really is amazing how people can write completely deceptive posts like this. You really must not have a spine or morals for that matter.

    • ub3r
    • 7 years ago

    Inside news from a friend in NXP..
    NXP is talking of purchasing AMD + ATI + all IP rights..

    These moves are just AMD is shaping up for the sale..

    Dont say i told you. 😉

    • Metonymy
    • 7 years ago

    You know… I just don’t like AMD/ATI products, and never have. Why? I dunno, other than I always liked nVidia cards because they were so easy to make work in linux and I knew how. (And I like their green color.)

    Granted, AMD mb’s always seemed to provide more for the money than Intel boards, and I used one of their $60 processors for my brother’s system and it works great.

    But…. I put a Celeron G530 in a system and I’m amazed how good it is, and now nice and cool. And I just like Intel chips (though it took a while after owning a Dell with a Prescott-core P 4).

    And I’m expecting that Haswell will be the Intel chip that lets me buy a notebook without a discrete graphics chips.

    But damn, I hate to see AMD do so badly… it’s like it makes feel like Intel chip prices are set in stone these days.

    • HisDivineOrder
    • 7 years ago

    And last I heard AMD is planning another round of employee layoffs.

    Little wonder that they’re pushing the next gen of GPU’s out a ways, trying to maximize how much they get from this gen. Unfortunately, nVidia will be late (as is typical) but they won’t be so late that AMD gets to milk the market forever. And if this gen proves anything, it’s AMD needs to get out in front of nVidia with solidly low pricing or people’ll just wait for the Green Team.

    No price difference, no bundle, no great press is going to make up for the fact that nVidia is nVidia is successful and AMD looks like a company on the verge of bankruptcy. AMD should spin their GPU biz off into a company called–and I’m just spitballing here–ATI and let the AMD CPU biz go quietly into the sunset. They can’t right the ship in time. They failed spectacularly in that clinch moment when they had to succeed and everything else since then has been feints and wordplay to avoid anyone else knowing the moment came and went.

    ATI can walk away with a clean slate and an awesome future while AMD is escorted gently to that spot behind the woodshed. You know the one. Where the sunset can be seen in the distant horizon past the fields, hanging patiently over the treetops? Where the grass is tall and the soil is tender and soft. The one where you’ll tell AMD about all the great times you had. All those times, they were great, weren’t they? When you got that Slot A Athlon and it was fast. It overclocked to an indecent degree. Or how 3dNow! was just worlds better than the original MMX, wasn’t it? Remember when FX was faster than anything else on the market? Remember when you put multiplier control back into CPU’s? And PR to replace clockspeed as the measurement of a CPU? That was so, so awesome. Remember how Netburst burst on impact, how RDRAM was the devil’s RAM, and hyperthreading was a phantom meant to make up for excess length in pipelines? Remember when Intel released a Pentium, trying desperately to keep up with Athlon’s and they had to recall it because it kept failing?

    Yes, AMD. We really had some great times together. We did. AMD, you really looked like a winner back in those days. Remember? I thought we would–

    The shot rings out. The wings of crows flap and scores of birds flutter out in all directions. You look down and you sigh.

    You whisper, “I’ll miss you, AMD.” You know in your heart, however, that the AMD you miss is one that passed a long, long time ago. Before words like Phenom and Bulldozer tore its heart out. Before words like Llano and Trinity stole its soul. You walk around to get a shovel from inside the shed, knowing it’s for the best. Because if AMD had held onto ATI for too long, it’d be two bodies you were burying, not just one.

    And the back field is no place for a GPU maker with more adventures left in it…

      • srg86
      • 7 years ago

      [quote<]You know in your heart, however, that the AMD you miss is one that passed a long, long time ago.[/quote<] The AMD I missed passed when Jerry Sanders III retired, it's never been the same since. In particular it was the AMD of the Am386DX-40, Am5x86, K6/2/III and Athlon. Also of "Real Men have FABs".

      • Darkmage
      • 7 years ago

      That was a better love story than Twilight.

        • yogibbear
        • 7 years ago

        I’ve seen postage stamps that are a better love story.

        • NeelyCam
        • 7 years ago

        And almost as disturbing

      • MadManOriginal
      • 7 years ago

      So when is [i<]your[/i<] e-book coming out?

    • link626
    • 7 years ago

    i read somewhere that they are still selling off the inventory they wrote off last quarter.
    since it’s written off, they can sell at whatever low price they want for ‘pure profit’

    • jjj
    • 7 years ago

    There are more interesting things here.
    According to the WSA all processors will be made at GloFo and some GPUs too.
    On the financial side,keeping orders and margins pretty much flat while moving more products to GloFo is not very encouraging.

    • chµck
    • 7 years ago

    If you own shares of AMD and they are bought up, what happens to your shares?

      • GodsMadClown
      • 7 years ago

      You’ve sold them to someone else, unnamed by your passive voice style. Now, let’s move on to harder questions. Who’s buried in Grant’s tomb?

        • derFunkenstein
        • 7 years ago

        Steve McQueen.

      • derFunkenstein
      • 7 years ago

      Wait, do you mean if the shares are bought up or if AMD is sold?

        • brute
        • 7 years ago

        i think he meant both.

        If AMD is going to be bought, then shares will have to be acquired. You may sell or keep your shares.

        if AMD goes out of business, you may use your shares as kindling, toilet paper, festive decorative pieces, monopoly money or even to roll cigarettes.

          • chµck
          • 7 years ago

          Yeah the wording is ambiguous.
          What happens to your shares of AMD if AMD is bought up*

          So the buying body will have to buy your shares from you?

          I don’t actually own any AMD, I’ve always just wondered what happens if a company you own shares of gets bought up.

            • brute
            • 7 years ago

            they dont have to buy shares from anyone in particular. they just need to get a lot of shares. you can sell yours, or keep them. up to you. if enough people refuse to sell shares, then the takeover bid will fail.there are probably ways for the board to ensure a sale takes place though

            you dont need 100% of the shares of a company to effectively own/control it.

            there are poison pill provisions in some companies, too. or weird things like how FoMoCo has their voting stock setup. it all depends on the company.

            • Ringofett
            • 7 years ago

            If an acquisition gets announced, you’d do best to sell right away, in case they back away later on. But generally if you hold on to the stocks, your broker will take care of the nitty gritty for you. Whatever the appropriate ratio ends up being of the new parent companies stock, or cash, will magically appear in your account in place of the AMD shares at some point after the closing date (which can be months down the road).

            • chµck
            • 7 years ago

            It’s best to sell off asap because the ratio will probably not be in your favor?

          • MadManOriginal
          • 7 years ago

          Better be a virtual fire, e-poop, computer desktop decorations, or some of those fancy e-cigs since basically no one gets paper shares any more.

    • flip-mode
    • 7 years ago

    AMD doesn’t have a single CPU upside right now.

    Healthy PC demand: nope
    Die size: nope
    Power draw: nope
    Performance lead: nope
    Performance per watt: nope per nope
    Fab process: nope
    Near-term fix to any of these: nope
    Cash in the bank: very nope

      • yogibbear
      • 7 years ago

      Better on-die GPU?
      Cheaper motherboards?

        • flip-mode
        • 7 years ago

        I know it’s controversial, but I flatly reject the notion that the IGP is a strong driver of CPU sales, or the cheaper mobos. Especially with OEMs, which are by far the majority of CPU demand. I know many people disagree, but that’s my opinion. I don’t know anyone that would buy an inferior CPU just to get the superior IGP. Cheapness of the platform surely generates some sales, but that’s not really an unmitigated upside for AMD, who’s chips are larger and cost more to make but still have to be sold at lower prices.

          • Sahrin
          • 7 years ago

          I don’t think what you said is controversial, but I do think that system cost is a driver of sales, especially in an era where the performance application (gaming) is slowly regressing from pushing hardware due to console stagnancy.

          • brute
          • 7 years ago

          PRICE, not performance, is what drives CPU sales for most of the market

          CPU performance isnt a strong driver outside the performance market, either. it’s all based on price. OEMs price machines. people buy PCs based on how m uch they cost, assuming that as price increases, performance increases as well.

            • flip-mode
            • 7 years ago

            Intel has CPUs at every price point that AMD does, so I don’t see the lesson here.

            • brute
            • 7 years ago

            what’s your argument?

            and intel can afford to sell cheaper CPUs better than AMD. cheaper for intel to mfr, higher margins, more profitable/actually profitable

            • flip-mode
            • 7 years ago

            My argument? I don’t see any light in the tunnel AMD is traveling.

            • brute
            • 7 years ago

            me either. low volumes and low margins suck in and of themselves. combined, they are the last girl at the bar at 2 AM.

            • sparkman
            • 7 years ago

            AMD’s only winpc hope is to out-design Intel.

            Intel’s near-monopoly and decent management gives them vast R&D capabilities. Meaning that AMD really has no hope of out-designing Intel given the differences in revenue.

            I understand that AMD also loses rights to produce x86-compatible chips if they get bought out by somebody with big enough guns to go up against Intel in the premium chip market, meaning this will never happen.

            I expect AMD to gradually switch to ARM (along with the rest of the world) and finally give Intel some competition that way.

            • shank15217
            • 7 years ago

            Wrong, there is always room for at least a second x86 competitor. An entire market is out there ready to support AMD if AMD can produce good chips. Lets face it, AMD has slipped into a downward spiral due years of bad management and Rory Read is just playing nurse.

            • chuckula
            • 7 years ago

            [quote<]PRICE, not performance, is what drives CPU sales for most of the market[/quote<] In that case, AMD would be completely sold-out of stock and they'd be *raising* their wafer orders instead of cutting them!

            • brute
            • 7 years ago

            not really, no. dont forget that price is associated in consumers mind with quality, and note that i didnt say that cheap = sells best. price is how consumers gauge quality, reliability, speed, etc when they dont know much about a product. relative price = higher/lower is how they determine the above

            most computers that sell arent <$400 budget boxes. i dont have actual stats, but id guess that midrange makes up for the bulk of the market.

            • clone
            • 7 years ago

            if AMD started selling FX 8350’s for $1 would anyone pay $100 – $400 for an Intel cpu?…. the fanboys would wait for Intel to adjust while everyone else would buy AMD…… because price is the determining factor.

            AMD is currently selling FX 8350 for around $180, while cheaper the price isn’t compelling and the savings on CPU will be lost in overall system cost, if you were buying a brand new desktop PC for $600 would you choose an AMD based one for $580… probably not, I wouldn’t.

            say AMD cut’s Piledriver prices by 50% and the system’s overall cost drops to $470 vs $600 for a comparable Intel…. compelling is back in the conversation.

            again price is the absolute, the truth is while AMD cpu’s are quite good they aren’t as good as Intel’s at the current price…. operative word being price.

            • just brew it!
            • 7 years ago

            [quote<]AMD is currently selling FX 8350 for around $180, while cheaper the price isn't compelling and the savings on CPU will be lost in overall system cost, if you were buying a brand new desktop PC for $600 would you choose an AMD based one for $580... probably not, I wouldn't.[/quote<] If the performance was similar, I would. As noted previously, I also like the fact that AMD's consumer products support ECC RAM (though not on the APUs, apparently). And yes, I know the fact that I care about ECC on desktop systems puts me in the minority.

            • wintermane666
            • 7 years ago

            According to what I just read amd is cutting wafers 75%… from 500 mil to just 115 million bucks worth. The fact they did this means they have almost no money left at all so yes they are in fact doomed. Oh im the old wintermane…

            Found info here…

            [url<]http://arstechnica.com/information-technology/2012/12/amd-puts-brakes-on-chip-manufacturing-as-sales-plummmet/[/url<] Ick ick ICKY ICK ICK!!!!!!!!!!!!

            • clone
            • 7 years ago

            wow…. what an ending to what was a really fun game to watch…. kinda sad.

          • shank15217
          • 7 years ago

          I flatly reject the notion that Intel’s faster chips really make that much difference in the real world of personal computing especially considering all the other variables. If any OEM decided to embrace the AMD APU in full form instead of creating the bargain bin low priced crap they usually release, people would buy AMD more often. Sadly the best looking notebooks/ultrabooks out there all have Intel chips.

      • anotherengineer
      • 7 years ago

      “Healthy PC demand: nope”

      The same could be said for Intel.

      And that type of negativity, is what will eventually snowball and hinder the economy for a long time.

      You may be honest but sometimes you remind me of bi-polar disorder, either everything is awesome or everything is doom and gloom to oblivion.

        • flip-mode
        • 7 years ago

        The same does go for Intel, I think, but Intel’s in a much better position in every other respect, and I also think that low demand hurts AMD a BUNCH more than Intel. Consider: AMD barely makes profit during peak demand swings. Intel STILL makes profit during weak demand! Just less profit. The deck is stacked against AMD to begin with, so having such a low point with its CPU products magnifies the danger.

          • superjawes
          • 7 years ago

          Depends on the nature of the market. If the PC market is as cyclic as the automotive/heavy truck market, being behind might not be as damaging so long as they are ready to sell product when the market swings back upward.

          Unfortunately, I don’t think this is the case. I get the feeling that the PC market will be shrinking while volumes migrate from PC to mobile platforms.

        • ludi
        • 7 years ago

        Actually, “that type of negativity” is the facts on the ground right now. You don’t have to like them (who would?), but that doesn’t make the assessment for AMD less problematic. In their present state they [i<]need[/i<] "healthy PC demand" just to break even, while Intel is still highly profitable.

        • Bensam123
        • 7 years ago

        That’s the way a lot of people work online. Have you seen some of the comments in the AMD threads? It’s almost like they WANT AMD to fail. Like people who start chanting ‘jump jump jump’ at someone who is considering suicide on the edge of a building (which has actually happened in real life).

        The jump phenomenon is called deindividualization. I personally think the online thing stems from people having shitty lives and looking to put someone else out the door or take out aggression due to a bad day. Low self-esteem also leads to people thinking in a very polar manner. They instantly give up or they think somethings amazing. (You should see some of the people that play LoL or NS2)

        [url<]http://youarenotsosmart.com/2011/02/10/deindividuation/[/url<]

      • ronch
      • 7 years ago

      WIll AMD survive: nope

      • maxxcool
      • 7 years ago

      “very nope” … liked that one 🙂

      • Bensam123
      • 7 years ago

      How about performance/$? I really don’t understand how everyone can simply overlook the biggest driver of sales, the big fat $.

      Cash in the bank isn’t part of a CPU ‘upside’, nor is ‘near term fix’ or ‘healthy pc demand’. Fab process actually hinders Ivy Bridge if you try to OC it. Who cares about die size? You could add die shape here too as something else that doesn’t matter. Performance lead at what price point?

      All Intel has is performance per watt and better IPCs. People seemingly completely overlook this and generate all sorts of other nonsensical arguments to buy Intel because they’ve seen a $1000 processor trump a $200 one in benchmarks.

        • jonjonjon
        • 7 years ago

        wrong. nice try though.

        [url<]https://techreport.com/review/23246/inside-the-second-gaming-performance-with-today-cpus/8[/url<] [quote<]We don't like pointing out AMD's struggles any more than many of you like reading about them. It's worth reiterating here that the FX processors aren't hopeless for gaming—they just perform similarly to mid-range Intel processors from two generations ago. If you want competence, they may suffice, but if you desire glassy smooth frame delivery, you'd best look elsewhere. Our sense is that AMD desperately needs to improve its per-thread performance—through IPC gains, higher clock speeds, or both—before they'll have a truly desirable CPU to offer PC gamers.[/quote<]

      • rrr
      • 7 years ago

      Multithreaded performance per dollar? Yup.

    • ronch
    • 7 years ago

    I would really like to know why AMD always has to pay these ‘charges’ to GF. Is GF procuring equipment solely for AMD? Are other GF cutomers paying these charges? There doesn’t seem to be an end to these charges! Poor AMD, being ass-kicked not only by Intel but GF as well.

      • flip-mode
      • 7 years ago

      GloFo probably orders a bunch of wafers based on AMD’s orders. When AMD reduces the order, well, the wafers are probably bought and paid for. Dunno if that’s how it works, but it’s a guess. Also, GloFo probably has production lines tuned for AMD’s chips, and those lines can’t just be swung over to produce something else in a day’s time. GloFo probably puts charges for that in the contract. GloFo gets to cover its ass; AMD gets most of the risk exposure.

        • shank15217
        • 7 years ago

        Which is sad because AMD sold its fab division to reduce risk and stop the bleeding. Dirk Meyer was a bigger idiot than Hector Ruiz, at least his investment is producing some products.

      • anotherengineer
      • 7 years ago

      A reality when you don’t own your own Fabs.

      Maybe AMD should see what Intel would charge to fab their chips 😉

        • ronch
        • 7 years ago

        Well, I never hear Nvidia, AMD or any other customer being charged this way by TSMC.

          • just brew it!
          • 7 years ago

          Probably because companies that use foundries like TSMC don’t normally mis-estimate demand for their chips as badly as this. AMD/GloFo is also kind of a special case — very high volume of chips that (due to SOI and die size) are rather expensive to produce. GloFo would’ve been stupid not to have a cancellation penalty clause in the contract. Especially given that IIRC they negotiated a deal a couple of years back that all yield issues were solely GloFo’s responsibility, which is quite favorable to AMD (not sure if this part is still in effect).

          Edit: Also quite possible that some of that payout gets passed along to some of GloFo’s suppliers. I imagine GloFo will be breaking a contract with the company that supplies their SOI wafers (at least), and may need to pay a penalty for that. If they had ordered additional equipment in anticipation of a ramp-up in production of Piledriver chips, that’s yet more cost and/or broken contracts that need to be dealt with.

            • bcronce
            • 7 years ago

            I also agree. Something along the lines of, it takes many years to get a chip running on a fab. If AMD reserved a certain amount of production but doesn’t use it, then that’s an opportunity cost to GF if not also a machine investment cost.

            • sschaem
            • 7 years ago

            This also open production capacity to other companies… and its not the their is a shortage of demand. (x86 CPU might be stagnating, but the chip industry overall is moving up).

            TSMC just invested massive amount in new fabs to cover orders.

            GF will have no problem, getting that money in penality from AMD, open capacity to other client (like Qualcomm to make some shiny Adreno based SoC) and make even more profit.

          • NeelyCam
          • 7 years ago

          WIth TSMC, the situation has been more like “crap there’s SO much demand that we don’t have enough capacity!” Even if someone cancels, there are plenty others waiting in line.

          GloFo has been proud about having a lot of customers, but I haven’t heard of any outside AMD.. and even if there are some, they are unlikely to be super-high-volume customers. GloFo’s missteps in 32nm process readiness don’t inspire much customer confidence either..

          Overall, I think it would benefit GloFo to be more lenient with AMD at this point. AMD is their biggest customers, and GloFo [i<]should[/i<] know that these one-time charges are destroying AMD. If GloFo wants its biggest customer alive, they should accept some of the damages... especially considering it was their own process screwups that hurt AMD the most

            • Ringofett
            • 7 years ago

            Maybe why GloFo hasn’t been more lenient is explained in the first half your post; maybe they figure if AMD explodes, they can steal business from TSMC?

      • just brew it!
      • 7 years ago

      They have a contract with GF to produce a certain number of chips. Typically there are financial penalties for either party if they back out of a contract.

      • odizzido
      • 7 years ago

      Since they used to own GF I really feel like they are kicking their own asses.

        • ludi
        • 7 years ago

        AMD’s losses when they still owned the fabs were accruing at a much more alarming rate, and they would have probably bankrupted the company long before now in trying to keep up with Intel in process tech. Going fabless was unavoidable, and now they have to contract the production in the ordinary way. You break your contract, you take the penalties.

      • Silus
      • 7 years ago

      It’s called poor management decisions and AMD has many of those…actually that’s basically all they do really.

    • chuckula
    • 7 years ago

    GloFo has the better end of this deal: they get the money and they don’t have to make the chips.

    Anybody who thinks that GloFo is still under the control of AMD and is just in business to cater to AMD’s needs should see this as the final writing on the wall that AMD is on its own now.

      • anotherengineer
      • 7 years ago

      Ya no doubt, get money for not making chips plus free up fabs for other customers to make more money. I think if I was AMD, I would have got them to fab something, maybe even older phenom2 quad/hexa cores and sell them at cost or just over so at least to break even.

      • NeelyCam
      • 7 years ago

      I predicted this would happen, and was ridiculing the notion that “AMD the Design Company” was making money while “AMD the Manufacturing Company” was running at a loss during the transition.

      A foundry has a margin, and just because foundry margin was (temporarily) completely shifted to product margin through an “at cost” foundry deal, the Design Company was not really profitable. The chips were too big (=expensive to make) compared to the performance they had.

      Now that AMD has lost the foundry margin to GloFo, things have unraveled. The cost of the chip is really eating into profits, and bad demand predictions resulted in chip purchase deals that AMD couldn’t handle anymore.

      The multiple renegotiated chip supply deals (with all the one-time penalties associated with them) are a clear sign of how badly AMD has managed their product planning during the downturn. The COO needs to be fired. Oh wait…

      [url<]http://www.eetimes.com/electronics-news/4212993/AMD-s-COO-leaves-firm[/url<] I guess he already took off, leaving burning ruins behind

      • Stranger
      • 7 years ago

      i don’t know though without AMD does gloflo have the volume to pay for the foundries? It seems like niether AMDs graphic devision or nvidia is really interested in GLOFO. what other big firms are there?

    • Meadows
    • 7 years ago

    At first glance, that seems like a lot of money. Begs to ask the question: would they really have been worse off than that by keeping the orders?

      • NeelyCam
      • 7 years ago

      Yeah… bean counters decided that this way they were gonna save $50mil in the end, not considering the idea that having the chips in hand and selling them at zero margin would still be better than just taking a 300mil hit.

      Unless they predicted that the chips wouldn’t sell even at cost..

        • Meadows
        • 7 years ago

        My thoughts exactly. Internal analyst predictions must’ve been pretty steaming turdy for them to prefer sinking the ship as opposed to arriving at the port and letting the cargo rot there.

          • clone
          • 7 years ago

          along with that I’m wondering how many chips AMD cancelled to suffer that 320 million hit….

          AMD’s revenue was around 1.27 billion last quarter? correct me if I’m wrong but isn’t that number based on total sales and with that in mind they cancelled enough production to incur a 320 million penalty.

          could they have cut orders by more than 50%?

            • Meadows
            • 7 years ago

            Yes. According to a source, they had a $500 million order in place and they cut it by more than 70%.

            • clone
            • 7 years ago

            320 is 64% of 500…. wow that penalty seems incredible and goes to your question, would they really have been worse off had they not kept the order in place?

            someone else in the thread mentioned that one of AMD’s main shareholders is also a huge part of GloFo….. but even still I don’t understand how this could be a choice with any particular positive to it.

            ppl can crap all over AMD product all they want, only the most devout fanboys couldn’t help themselves from buying if they listed Piledrivers for $50-$75, power consumption, single threaded perf would all be forgotten and it would brutalize Intel in the process…. would AMD make a dime?… no, would they lose a few?…. sure, but would they lose $320 million?

            I find that highly doubtful given what little info I’m working with.

            I’ll chalk it up to a greater conspiracy theory…. price fixing.

        • Chrispy_
        • 7 years ago

        [quote<]selling them at zero margin would still be better than just taking a 300mil hit. Unless they predicted that the chips wouldn't sell even at cost.[/quote<] If AMD sell them at cost, they're still not that attractive and will probably rot in inventories until sold at [i<]below[/i<] cost. AMD can only affect their own cut, but they'd still have to package, test, ship and provide warranty coverage for these products. You then have the eventual vendor overheads, shipping, and sales tax which affects everything (not just AMD's portion on the costs) and what you end up with is a..... ~[b]15% discount.[b] Not enough to save the sinking ship.

          • wintermane666
          • 7 years ago

          In simple terms they likely didnt just buy the shipment and sell near/at cost simply because they didnt have the money to buy the shipment at all or because if they had they would have run out of money completely before the chips sold.

          At this point there is nothing that can save amd. They cant pull out of a sprial like this as they now no longer have anything to sell and are still deep in debt. Id expect massive layoffs as whats left of management tries to hold out for the last bitter years before it gets ripped to bits and sold off.

            • Chrispy_
            • 7 years ago

            If it’s that dire then I hope they float the graphics divison before it goes down with the ship.

            Watching AMD over the last decade has been very much like watching RIM over the last two years.

            • wintermane666
            • 7 years ago

            I dont think anyone would be willing to buy that part anymore.

            • just brew it!
            • 7 years ago

            Why not?

            • wintermane666
            • 7 years ago

            Because I think most of what made ati valueable will be badly damaged or even lost before amd decides to sell it off.

            • clone
            • 7 years ago

            I believe a lot of the damage was done to ATI during the first epic crash in 2009 soon after the acquisition.

            they sold off a lot of up and coming tech in a bid to raise funds at that time.

            • wintermane666
            • 7 years ago

            Yup but they will kill off alot more of the poor old dear before the end in sure of it. I know im gona hate what happens to what was ati.

      • flip-mode
      • 7 years ago

      Nobody takes a $320 million charge for no good reason.

        • MadManOriginal
        • 7 years ago

        I think you meant….

        [url<]http://cdn.memegenerator.net/instances/400x/31475035.jpg[/url<] OK that was fun! Time for more memes: [url<]http://cdn.memegenerator.net/instances/250x250/31474889.jpg[/url<] [url<]http://cdn.memegenerator.net/instances/250x250/31475300.jpg[/url<] [url<]http://cdn.memegenerator.net/instances/400x/31475562.jpg[/url<] [url<]http://cdn.memegenerator.net/instances/400x/31475935.jpg[/url<] [url<]http://cdn.memegenerator.net/instances/400x/31476175.jpg[/url<] [url<]http://cdn.memegenerator.net/instances/400x/31476261.jpg[/url<]

          • glacius555
          • 7 years ago

          Last one is a really sad one..

          • NeelyCam
          • 7 years ago

          Must be Friday, but I thought those were hilarious

          • Chrispy_
          • 7 years ago

          A WINNER IS YOU

    • Farting Bob
    • 7 years ago

    The more stories that come out about AMD, the more likely it is that they know time is short and that its almost inevitable that they will fold or be bought out for a tiny amount soon. The end is nigh, i just hope someone steps in and buys the x86 licence from them (or arranges a new deal with Intel) because otherwise things are going to come to a crawl in development, with prices heading north.

      • Prestige Worldwide
      • 7 years ago

      The x86 license is non-transferable, so that’s a NOPE!

        • Game_boy
        • 7 years ago

        Intel can’t enforce that or the DoJ would come down so hard on them. Having 100% share of a market of that size is unprecedented.

        Any buyer would negotiate that with Intel.

          • nanoflower
          • 7 years ago

          Sure they can. There’s nothing that prevents another company that bought AMD from negotiating a new X86 contract with Intel. In fact that would seem to be a likely outcome if they are buying the entire company. As I recall even the AMD contract with Intel runs out in 2014 so they will have to renegotiate with Intel then.

          Of course given the situation I’m sure Intel will be willing to sign a contract with someone else if AMD goes under. It won’t be cheap but I’m sure they will do it.

        • 5150
        • 7 years ago

        Nachos, Lemonheads, and my dad’s boat!

      • BestJinjo
      • 7 years ago

      Anyone who says AMD is doomed in the next 12 months or the end is near has no clue to what’s going here.

      There are 3 major parties involved:

      GlobalFoundries
      AMD
      Mubadala Development Group

      The Mubadala Abu Dhabi, is one of largest if not the largest investment groups in the world, and they happen to be the largest shareholder in AMD. Mubadala have also invested more than $10 Billion dollars in GlobalFoundries, and according to sources in the know, this investor is willing to go up to $20 billion dollars, to achieve profitability for GlobalFoundries by 2015.

      If you read financial press, most investors are fully aware that Mubadala will invest $ into AMD because they need AMD to be a client of GloFo at least in the immediate future. AMD is not going anywhere because it’s needed for GloFo to stay afloat for the time being and to achieve its own profitability targets and gain new clients / diversify its client base.

      The AMD doom-and-gloom posts are missing the part that Mubadala invested $10B+ already into GloFo. They could care less about dumping $500 million into AMD if AMD needs more $ because their key investment is GloFo in this. They already own 19% of AMD and will increase their stake if necessary. They actually exercised some of their warrants last week to extend their investment in AMD to 19% to prop up AMD stock price.
      [url<]http://meshpress.com/volume-buzzers-pfizer-inc-nysepfe-advanced-micro-devices-inc-nyseamd/1222510.html[/url<] I suggest people start doing research on understanding the relationship Mubadala has with GlobalFoundries and AMD and then looking at things from a big picture perspective, rather than spreading fud. [url<]http://www.brightsideofnews.com/news/2012/11/28/globalfoundries-expansion-game-changer-for-intel2c-tsmc--semiconductor-industry.aspx[/url<] This is not about AMD vs. GloFo but how Mubadala is managing these 2 key investments to make sure their GloFo egg hatches. Don't for a second think the Abu Dhabi guys are not calling the shots. Time to understand who the real big fish in the ocean is. [url<]http://mubadala.ae/images/upload_images/Half_Year_Results_Mubadala_Development_Company_2012.pdf[/url<] Whenever AMD needs emergency $, it's always there in the hundreds of millions. A smart investor is not going to just throw $ but will do so if it's necessary to make sure their overall strategic plan is aligned. [url<]http://www.bloomberg.com/news/2012-12-03/amd-rises-as-mubadala-investment-eases-liquidity-concerns.html[/url<]

        • sschaem
        • 7 years ago

        AMD is not GF primary client anymore….

        AMD could vanish tomorrow on GF will be just fine.

        The reason why the government of Abu Dhabi will not let AMD go into a stupid bankruptcy is that the have so much invested in it.
        If AMD management render AMD worthless, that 20% stake will be worth zero.

        And they are in to make money, they wont give AMD money just to pay the CEO and VPs salaries.

        Mubadala is an investment company , not a charity.

          • BestJinjo
          • 7 years ago

          Ya, you are still missing the big picture. If Mubadala thought AMD is going to be bankrupt and this is inevitable, they wouldn’t have increased their ownership % last week, but instead dumped their losses while the stock is worth something. It’s obvious they view both of those investments as undergoing reorganization and difficult time in the industry, but have a positive outlook for both of them. If you look at how investment companies operate, they won’t just hold on to something if they don’t see long-term prospects.

          You clearly missed the part that if 1 company is the largest shareholder in both firms, then they were fully aware AMD would be terminating the contract with GloFo before it was publicly announced. I presume you were able to connect those dots. So why would a company continue throwing $ at something they thought was going to fail in the next 12 months? If you look at AMD’s debt-to-assets ratio, they are doing better actually than a couple years ago and no one was screaming doom and gloom back then.

          You know AMD has 5.57 billion of debt in September 2009? Now it’s slightly above 2 billion.
          [url<]http://ycharts.com/companies/AMD/long_term_debt[/url<] I don't recall people forecasting the end of AMD 2-3 years ago and their financial position was actually worse.

            • Peldor
            • 7 years ago

            That they have a positive outlook is not proof AMD will improve. This is the company that just blew their order forecast by hundreds of millions of dollars.

            Garbage in garbage out applies to investors decisions too.

            Edit: Your linked articles don’t seem to show Abu Dhabi increasing their share yet.

            As for the debt, well no surprise it went down: Intel settled with them for 1.25 billion and similar levels of debt were transferred to GloFo’s balance sheet.

            • NeelyCam
            • 7 years ago

            [quote<]I don't recall people forecasting the end of AMD 2-3 years ago and their financial position was actually worse.[/quote<] Their financial position may seem better now, but their competitive position is much worse, and that directly reflects on their future profitability. I don't see any way for AMD to be profitable in the PC space anymore - they are way too much behind, and don't have enough resources to pick it up. In ARM mobile chips space, the competition is even tougher and margins even lower, so that won't work either. The only space where they could have a chance is high-end GPUs where they are very competitive. The problem is, that market isn't that large and is going to keep shrinking

        • Ringofett
        • 7 years ago

        As to the Mubadala point, I think the Arab’s realized they were massive suckers the first time, and they’ll see no reason to throw good money after bad. I could be wrong, but we’ll see very soon.

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