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AMD drops test, assembly business

Posted: 19 Oct 2015 ?? ?Print Version ?Bookmark and Share

Keywords:AMD? test? processor? NFME? assembly?

Advanced Micro Devices Inc. (AMD) has announced that it sold a majority stake in its test, assembly and packaging facilities in Asia as part of a joint venture with China's Nantong Fujitsu Microelectronics Co. Ltd (NFME). The transaction will allow AMD to gain nearly $320 million as it struggles after reporting another quarterly loss that included a $65 million inventory write-down for older accelerated processing units (APUs).

AMD will retain a 15 per cent ownership in its test and assembly facilities in Penang, Malaysia and Suzhou, China. The 1,700 AMD employees at those facilities will be transferred to the joint venture.

The deal is consistent with AMD's strategy to "focus the company on improving our long term financial performance by building great products and simplifying our business model," said Lisa Su, AMD's president and CEO.

"Forming a back-end manufacturing joint venture is a significant step toward achieving these goals, as we align our operating model with other fabless companies and strengthen our balance sheet," Su said.

Lisa Su

AMD reported Q3 sales of $1.06 billion, up 13" compared with Q2 but down 26" compared with 3Q14. The company reported a net loss in accordance with generally accepted accounting principles of $197 million for the quarter, compared to a GAAP net loss of $181 million in the previous quarter and a GAAP net income of $17 million in 3Q14.

The Q3 marked AMD's fourth straight quarterly loss. Earlier this month, AMD announced plans to cut five per cent of its global workforce.

AMD has struggled in recent years amid a declining PC sales. As consumers have increasingly embraced mobile computing platforms such as tablets and smartphones, the dominance of x86 processors sold by AMD and Intel has decreased, opening the door for other types of processors based on the ARM architecture and others. In 1H15, AMD slipped from the ranking of the 20 top chip suppliers compiled by IC Insights Inc.

PC sales have continued to be sluggish in 2015, despite the launch of Windows 10. Earlier this month, Gartner Inc. and International Data Corp. report that PC shipments declined by between eight per cent and 11 per cent in Q3. Analysts had expected the launch of Windows 10 to result in a slight uptick in sales, largely because Microsoft is allowing users to upgrade their existing PCs to the new OS free of charge, unlike previous Windows launches.

Su said Friday that the $65 million write down was primarily due to weak PC sales in Q3.

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