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AMD To Close Plants, Lay off 2300, Lose Gateway
cdrudge writes: "According to this article on CNN, AMD will be closing 2 plants in Austin, TX and also their operations in Penang, Malaysia due to slack demand. 2300 jobs will be cut in the process. The same article mentions Gateway dropping it's 'Select' line of computers. Their 'Select' line of computers were Gateway's only AMD-based systems. A Gateway spokesperson said 'We're consolidating all of our offering behind Intel, which was the biggest part of our mix already.'"
That brings it up to what? 30,000 or so lost jobs over the last couple of weeks? Definitely not very encouraging.
Though on another note, it's very disappointing to see Gateway abandon AMD in favor of Intel. Considering that the AMD processors have a tendency to 'whoop the crap' out of comparable Intel chips (when you factor in the cost, especially) it seems that AMD would've been more logical as a "More bang for the buck" system.
Would anyone like to guess what sort of 'Incentive' was offered by Intel?
'Life is like a spoonful of Drain-O, it feels good on the way down but leaves you feeling hollow inside'
There's not much unexpected here.
The plants being closed were mainly used for foundry business. AMD does not want to be a foundry: the TSMC's of the world do that much better, and AMD wants to focus on their core competencies: processors and flash. The foundry business is almost accidental. It generally comes from AMD spinoffs designing communications and analog IC's who were transitioning to traditional foundries. Now they'll just have to transition faster.
The Gateway move was also not unexpected. Gateway is in lots of trouble. They want their big friends (Intel) to help them out, and so they are demonstrating their loyalty to their big friends.
Bryan
AMD clawed its way up on the merits of its products and zero OEM arrangements. In some ways, not having OEM arrangements is good, since computer manufacturers bully their suppliers down to razor thin margins. NVidia's increasing support for AMD should push things along in the end-user/gaming market, and the new multi-processor chipsets are helping AMD crack a market they've hardly touched - the server market.
The plants they are closing are their oldest plants, and coincide with a reduction in output that has been seen throughout the sector. It is even possible that it was becoming increasing difficult to find current products that these fabs were capable of producing.
This isn't the end of AMD, it just means they won't be posting earnings of 50 cents a share each quarter for a while. Intel's feeling the same crunch, and AMD's still got some decent cash reserves.
Seen any BadMarketing lately?
Our company tried to buy 200 Athlon based systems from Gateway to replace our four year old Pentium Pro machines. They refused to deal at all with us. We couldn't get a configuration we wanted, even though it was clearly possible. They wouldn't give us an extended warranty or upgrade coupons.
Basically, they told us that "businesses don't want AMD, so we won't sell them to you."
Sell computers for my job (in addition to being a full time CS student). I talked to the AMD rep who comes to our store. He had threemajor points:
One: no new processors from AMD anytime soon. Just renaming the processors and removing mention of the Athlon name (AMD 1600 for the 1.2 GHz, AMD 2100 etc).
Two: They are making a killing in the corporate market.
Three: There next big focus area is the laptop market. This will be the only place with "new" AMD processors. Most likely people will see more 1.0 GHz+ AMD based laptop systems soon.
Casual Games/Downloads
AMD isn't a small company, and its processor division is more valuable as a whole than if its assets are dispersed. Even if Intel managed to bankrupt AMD, someone would buy it. And after having bled itself for so long, Intel wouldn't have the resources to pick it up. TI or Fujitsu or NEC or some other happy semiconductor manufacturer would keep the CPUs coming.
Tom (of Tom's Hardware) had an interesting article a while back about how easily AMD CPUs and motherboards can get fried. I wonder if a high CPU failure rate has anything to do with this decision...
"If at first you don't succeed, lower your standards."
This might be a little off-topic, but as far as I see it, the problem with Gateway not being able to support a line of computers that does sell that many, is the support cost behind it. You need AMD-knowledgeable tech support, different MoBos, different assemblies, etc.
Dell, IBM, etc. all have the same problem. And it all seems to be related to the fact that the support costs for a low-margin, low-sales product line is too high. So why are the costs so high? From my experience, it's customer support. Too many people don't know how to use a computer and call (harass) the computer companies tech-support for the most minor of issues.
So I was thinking... let's turn it around. Create a computer company for smart people. Do not offer tech support. Do not offer customer service (outside of basic order processing) Just assemble and ship the product. If you don't know how to use it, don't buy it from us. A side benefit of this idea would be that "hard-core" computer geeks can stop wandering from site to site to build their computers. Since there's little over-head to cover, prices will stay cheap.
The same idea can be applied to ISPs. The major cost of an ISP is the customer support staff to go along with it. I'm sure there's a LOT of people out there that would gladly save 10%-25% of their Internet fee in exchange for having no customer support (since most people-in-the-know don't use it anyway).
Si hoc legere scis nimium eruditionis habes
Everytime I look up their stock report online, there's an accompanying stock analyst report saying how much their stock is undervalued. With education sales, excitement over the new iBooks, and 10.1 finally making OS X an OS that is stable AND resposnive, I expect apple to continue to be profitable through the 4 quarter.
And what apple has that a lot of companies do not have is an energized user base. How many people are really that excited about XP? How about a new Dell computer? These things just don't get people going like in the mac community. We're very enthusiastic about apple products and where they are going.
F-bacher
James Tiberius Kirk: "Spock, the women on your planet are logical. No other planet in the galaxy can make that claim."
I agree completely, kbyrd... When building a PC for my parents, I was forced to not run distributed.net due to overheating issues. From a price and performance standpoint, AMD is clearly whooping Intel's butt... From an engineering standpoint, I am astonished that AMD has put out a product with such a questionable durability.
"If at first you don't succeed, lower your standards."
I'm not sure about their Malaysian fab, but the one in Austin was only producing Durons at the end, with all of the Thunderbirds coming out of their new Dresden, Germany fab. Dresden was built to encorporate copper interconnects into the chip, and Austin was never upgraded.
Last I heard Dresden wasn't anywhere near capacity, so I guess that it's not too surprising that they would move production over there with their future lines.
What's disappointing to me is not so much that people were laid off - the airlines and AMD were respectively both in dire financial straits before the WTC disaster. The real issue is that rather than making sensible decisions, companies time their layoffs to make it have the least impact on their stock valuation. The airlines reacted now, because, hell, their stock is going to bomb anyway. AMD announces it's going to post a loss and knows it may as well pile on the layoffs, not much more damage. Not only that, but it makes them look like they are "restructuring" which makes investors happy. I worked at a company that was consistently doing poorly, and it was evident from inside the company, but they posted cheery quarterly reports. Then one quarter they lump all of their losses together, lay off a few people, and take it all on the chin. This financial maneuvering is pretty ridiculous and cheats the public and the company's investors.
I think I digressed more than enough there - essentially it's disgusting that companies exploit the WTC disaster to raise their stock valuation. The same way that it's dispicable that the next day senators were tacking missile defense amendments onto critical relief packages (luckily failing) and that Israel attacked a city it had been besieging. A big news item like the WTC disaster essentially blacks out all other news, and the exploitation of that factor was pathetic.
Look, I work at a Gateway country store. The guys that work with me pushed Athlons on anyone who walked in. Why? Because it was a superior product, and was cheaper. However, about 2 months ago some strange started to happen. First of all, the industry and Wall Street started to realize how poorly managed Gateway was (is), we started printing the price sheets for the P4 based systems on new Intel branded paper (wonder how much Gateway gets for that) and even more telling, we started building Athlons on some of the sorriest motherboards I have seen in a LONG time!! These boards just plain SUCK! Only 3 PCI slots (what serious user would buy this crap!) 1 AGP, integrated video (11MB SHARED!!! AGH!!) integrated sound, just a piece of crap. SO, we started selling P4's to serious users. Any customer worth his salt could look at the situation that Gateway put us in, and decided to just build their own Athlon system, because we no longer offered any type of benefit over custom building. So, to say the least, I am not a bit surprised by this. BTW, I wonder if Gateway gets any type of incentive from Intel for this move??
hmmm... Well lets see...
How many workstation & servers do you really think use (or need) more than 2 cpu's? From my experience unless you'd be better served by a 40+ cpu system, you don't need more than 2 or 4.
Even down the line with Hammer AMD doesn't see the need currently for more than 4 cpu's (& that's worst case)... Maybe you need 8 of those crappy Intel cpu's to come close to the performance of 2 AMD's, but that's no reason for AMD to come out with higher mutli-cpu systems...
Oh Intel btw only offers 2 cpu solutions for their P4 Xeon's riight now btw... So why aren't you complaining about how Intel needs 8 cpu systems with P4?
Corp america hardly wants to buy anything right now, hence the PC downturn of this year.
As for upgradable... Um Intel cuts off at the knees any upgrade option every 1 to 1.5 years... Where is that upgradability their huh? In fact AMD has a reputation for keeping the same tech for long stretches (which I admit has fallen slightly since Slot-A went away, but they always said SLot-A was temporary)...
Hmmm... 64bit path... I take it Hammer which will be released in time with MS's XP Server & Advanced server next year isn't 64bit enough for you huh? In fact Hammer is much better for business than Intel's 64bit solution... intel (yet again) forces you to toss away, while AMD promotes keeping what you have... The cost to use a Hammer cpu when upgrading a server (& keeping most of the same software you run now) vs. Itanium were you have to recode or buy new all your software is way lower...
AMD hasn't had to 'emulate' Intel since the 486... X86 is well defined & their 3dnow was something Intel hadn't bothered with yet... In fact they only did because AMD did first... Now who is following who? Intel sold the SSE/SSE2 instructions to AMD for licencing they needed from AMD... Again AMD makign out far better & not compyign Intel...
You go off about a bunch of crap that is wrong & then you whine how AMD needs to change... Well maybe if you could prove your point I'd agree, but you can't...
I am active on many a tech messageboard & so very influential people belong to some... I know one who works for a company that produces digital animation used by several major networks. Under his influence they ONLY use AMD based systems... In fact most recently they upgraded their modelers & part of their render farm to Dual CPU AMD based systems...
I effect the purchase decisions of a large group of people as a consultant for smaller companies (smaller being less than 100 employees)... Upon my recommendation they mostly buy systems from places like Polywell or Sys that sell AMD based products...
AMD doesn't need a new plan, AMD is doing just fine...
we are all invisible unless we choose otherwise
Thanks for the chance.
Here at Intel, life sucks. Profits are down, all the perks are gone, people are getting laid off, and there's more and more work to do. But, at least I have a job, unlike those 2,300 AMD'ers. Go to back issues of the register, and compare their leaked Intel processor roadmaps from a few years back. Go look at what we wanted to charge for processors. Then look at our prices now.
But no, we're certainly not beating AMD fair and square, are we? Not by cutting prices on our flagship products, delivering on time, satisfying the customer, etc... no, not that. Surely we must be engaged in some dark conspiracy to manipulate PC manufacturers into dropping AMD against their own financial self-interest. Does no one realize how stupid that sounds?
For those of you who think "Wintel"--realize this: Microsoft can give away products (PowerPoint, IE, PhotoEdit, etc.) in order to drive others out of the market, because 1) they don't have to pay much to make more copies of something once they have a program to sell and 2) they make enough money on enough different products that they can afford to give away products as a "loss leader" to undermine the market share of the competition. Chips cost money to make, and they're pretty much all that makes income for the company at this point.
If we're winning this round, it sure ain't fun. Pyrrhic victory at best--but at least all our fabs are paid for.