A Quick Summary of Recent AMD News - Finance, Layoffs, and Sales

By Published December 09, 2012 at 8:24 am

AMD is in the headlines again with more bad news. With AMD's recent layoffs, not to mention the leasing of their Austin campus and the disappointment surrounding Piledriver and Bulldozer, it's not a huge surprise to see another snag.

Photo credit: Sonic840 of Deviantart.

 

AMD announced Thursday that it was going to decrease its wafer supply agreement with GlobalFoundries, its third-party wafer supplier. AMD was slated to spend about $500 million on wafers in the last quarter of 2012, but with the rehashed agreement, they're now looking to spend less than a fourth of that - at roughly $115 million; AMD's lowered wafer agreement will result in a termination payment of $320 million over the course of several quarters. This further bad news supports the projection that AMD won't surpass Intel anytime soon.

Why did AMD amend its agreement? Despite recent acknowledgement of a growing enthusiast market, the overall desktop PC market is in a slump; demand on AMD's side was lower than projections when the deal was signed, but did AMD really need to cut this deal? The difference between what AMD was signed up for—$500 million—and what the amended costs are—$115 million payment plus the $320 million fine—is a difference of only $65 million. AMD is trying to hold onto every penny and slash unnecessary costs where possible. No surprise there.

AMD is still holding its ground in the APU market. The fact that AMD's Trinity line can outperform even Intel's HD4000 is impressive, especially when considering that the Intel HD4000 can run almost any game on low or medium settings (AMD's 7660G series tends to run in the upper-crust of medium settings, depending on the game). The name of the game for AMD is specialization - work on what it's good at and pick between: Affordability, enthusiast CPUs, and APUs. We'll see which direction AMD wants to go from here. Traditionally, AMD has had poor leadership, so it will be interesting to find out what AMD's talks with JPMorgan will mean for the future of the company.

- David D'Amico

Last modified on December 09, 2012 at 8:24 am

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