AMD cuts jobs, reduces costs

Advanced Micro Devices cut about 350 jobs this week as part of a previously announced plan to lower costs.

The Sunnyvale, Calif.-based chipmaker has now reduced its work force by about 1,550 positions worldwide, AMD spokesman Drew Prairie said, including those employees notified this week.

The reductions came as part of a cost-cutting plan launched last October, which aims to stem a series of quarterly losses by AMD, lower the company's expenses to $800 million per quarter and to save $350 million in 2003.

By lowering its quarterly expenses to $800 million, AMD projects it will break even in the second quarter and return to profitability during the second half of 2003. The plan assumes AMD will combine lower costs with higher unit shipments of its Athlon XP PC processors and flash memory products.

AMD originally expected to cut about 2,000 jobs, but thanks to cost savings found outside its payroll the company will likely be able to stop at 1,550, according to Prairie. "We're well on our way now to getting to that break-even point," he added. "Our emphasis is on lowering the break-even point, not necessarily reaching a (staff reduction) number of 2,000."

AMD made the majority of jobs cuts last November, when it eliminated about 1,000 positions. The remainder of the 1,550 positions came from this week's cuts, attrition and a series of smaller staff reductions, Prairie said.

AMD and UMC sitting in a tree
While AMD is evaluating its costs and employee roster, the company is also taking a look at its future manufacturing needs.

AMD, which entered into a broad-ranging collaboration pact with United Microelectronics Corp. in January 2001, continues to work with the Singapore-based company on several fronts. UMC manufacturers some AMD chips, Prairie said. Under the pact, AMD can also tap UMC to manufacture Athlon processors, if market demand calls for more than AMD can produce in-house.

However, AMD is winding down a chip manufacturing technology development program with UMC, Prairie said. AMD, which has also worked with Motorola, recently announced a new manufacturing technology agreement with IBM.

AMD originally said it would share with UMC a new 300MM wafer chip manufacturing plant to open in mid-2005 in Singapore, but the company has since backed off from that position and said it is evaluating other options.

AMD's CEO, Hector De Ruiz, said recently that the company is investigating joint manufacturing ventures with partners in Asia, Europe and the United States. AMD expects to make a decision in the next couple of quarters, Ruiz said.