AMD to Axe 1400 Jobs

The global chipmaker, Advanced Micro Devices Inc. (NYSE:AMD) has decided to cut close to 1400 jobs in order to reduce operational costs of the world’s second largest chipmaker.

The company has opted for this strategy in order to cope with the weaker computer market and delays in manufacturing which has a major impact on the second largest microprocessor manufacturer in the world.

Advanced Micro Devices Inc. announced the layoffs earlier yesterday and it will amount to almost 12 percent of the company’s total workforce of 12,000. The job cuts happen to be the first major move by the new Chief executive officer, Rory Read who was previously with Lenovo Group Limited (PINK:LNVGY) and joined AMD recently in August. The company plans to carry out the job cuts in gradually over a period of 5 months.

Advanced Micro Devices Inc. has been facing various problems in the industry, especially regarding the PC sales growth in the United States and Europe which has slowed down due to the weak economy and stiff competition from tablet PCs and smartphones.

The onset of holiday shopping season and the current market strength has sparked concerns as the pace of growth in PC shipments is slowing down in an increased rate. And this is quite alarming for AMD as it does not have a significant presence in the smartphone and tablet market and they are mainly into the business of microprocessors for PCs.

The new CEOs main job at present is to help the company come up with a meaningful strategy which allows AMD to penetrate deep into the computing market where its arch rival Intel Corp.(NASDAQ:INTC) is currently not present. This rivalry has taken a new face after the market share of both the companies in the PC market has reached a steady balance for years. Almost 80 percent of the PCs across the world run on Intel’s chipset and a majority of the rest essentially runs on AMDs chipsets.

Dirk Meyer, he predecessor of Read was replaced as the company lacked its presence in the mobile devices sector which has hurt the company more than Intel especially as AMD is not as large as Intel.  At present, the mobile chip market is dominated by Qualcomm Inc. (NASDAQ:QCOM) and Texas Instruments Inc. (NYSE:TXN).

Yesterday’s announcement about the layoffs has caused some manufacturing problems delaying the shipment of the company’s latest chips known as accelerated processing units. AMD expects to save around $22 million in 2012 by making various operational changes.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.