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.'"

Comments

Hey if that still fails

[SpanishInquisition]

They can still enter the 'heating componment' market.

For Gateway, Intel = cheaper

[Brento]

Here's a quote that stands out in the article:

Separately, embattled PC maker Gateway (GTW: down $0.10 to $6.07, Research, Estimates) said Tuesday it will phase out all of its systems based on AMD processors as part of its broader cost-cutting efforts.

It's cheaper for them to just source Intel CPU's and motherboards than to run two product lines, basically. I'm stunned that the price difference in the CPU alone wouldn't be enough to keep Gateway using AMD, but there you have it. For once, Intel is a cheaper decision.

Re:For Gateway, Intel = cheaper

[garcia]

Intel is still not less expensive. It is absolute bullshit to think that AMD wouldn't be a better choice for Gateway to sell.

The problem here is a lot similar (at least in my eyes) to the Pepsi/Coke college thing. Pepsi came on campus here at BGSU and gave them $8 million dollars to take PepsiCo as the main supplier of soft drinks (rather than having both like they did before).

Intel is pulling the same bullshit. They want to squeeze out the competition so they best way to do that is to force large outlets of computers to stick w/one chip vendor.

I consider this very unethical.

I don't know if this is exactly what happened in this case (but I can only assume that it is)

I can't see why people would want to spend more money for less output on an Intel machine when the AMD is tons cheaper and faster.

Yes, yes, we know the public is misinformed and really believes that clock-size is important but price is what gets most people.

AMD still wins there.

Bad choice Gateway.

Re:For Gateway, Intel = cheaper

[phillymjs]

For once, Intel is a cheaper decision.

Perhaps Intel made Gateway an offer they, in their increasingly-desperate financial straits, could not refuse. An offer like, "If you exclusively sell machines based on Intel processors, we'll give you a significant discount over what you'd pay if you offered your customers a choice."

This is a Microsoft tactic from way back, used with great effect to obtain their OS monopoly. The Microsoft File gives a detailed account of them using this tactic to stop Vobis, a German PC maker from offering DR-DOS. Microsoft gave Vobis a huge discount on the then-new Windows 3.x if they would exclusively sell MS-DOS and stop distributing DR-DOS.

~Philly

Re:For Gateway, Intel = cheaper

[MikeTheYak]

What case would that be? A few years ago, the DOJ investigated Intel on antitrust measures. Intel and the DOJ quietly settled out of court; no harm, no fuss. Considering that AMD DOES make an Intel-compatible product with around 20% marketshare, I don't think you can really show that Intel is a monopoly, even if you restrict yourself to looking at Windows-compatible processors.

The previous poster admits that he has no evidence that Intel is doing anything illegal, but assumes that they must be anyway. I find this to be just a teeny bit presumptuous. Intel may have simply offered better terms than AMD. Since Gateway only has to pass the cost of CPUs on to the consumer, I don't think that price/performance is so much the issue as a streamlined manufacturing pipeline and/or a worry about public perception.

Re:For Gateway, Intel = cheaper

[_|()|\|]

Pepsi came on campus here at BGSU [bgsu.edu] and gave them $8 million dollars to take PepsiCo as the main supplier of soft drinks (rather than having both like they did before).

Intel is pulling the same bullshit. They want to squeeze out the competition so they best way to do that is to force large outlets of computers to stick w/one chip vendor.

I don't think that's the issue, here. Vendors get a discount for a line of computers (e.g., Dimension, OptiPlex) that use exclusively Intel processors. That's essentially why the Select line exists: to sell Athlons without jeopardizing Intel discounts on other lines. I'm not aware of additional discounts for total exclusivity.

And yet more slashes to the crippled workforce

[weslocke]

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?

Re:And yet more slashes to the crippled workforce

[FFFish]

I really suspect that the job cuts that have been happening in industries in all sectors are more opportunistic than realistic.

By which I mean that these people have been deadwood for a good long time: it's just that while the stock market was rewarding those companies unjustly during the boom, those companies couldn't cut their workforce without severely impacting their stock value.

Now that everything is in the shithole, it's real easy to trash employees: hell, it's even desirable to drop the stock price, so that the company can buy it back for resale at a far greater value once the market recovers!

In support of this, look at the number of companies writing off intangibles. They're deliberately beating down their stocks, or at the very least don't care whether the stock drops any further.

Finally, the one big question I have is this: how the fuck do you end up with thousands and tens of thousands of excess employees? You'd have to be insane to retain that many staff when they're unnecessary -- why weren't they being hired/fired in trickles and dribbles, as the company needed/didn't need them? Makes more sense than the freaking cattle-calls they must have chosen when hiring en masse.

One last note: while being fired is stressful, many of these people are skilled and creative. It may take them a few months to get over the loss, but once they do -- look out! We're going to see entrepreneurship skyrocketing!

I think that's pretty exciting. There's going to be a lot of innovation over the next few years. Gonna drive the economy to new heights!

Not to sound like a nay-sayer...

[Rev.LoveJoy]

But with the power glut that's become the norm of a 'household' PC and the general economic slow down of late, news like this strikes me as making sense...

However, the line about Intel "aggressively pricing" their P4's is just so much CNN tripe. A quick look at Sharkey's Extreme Weekly CPU prices shows this to be BS.

(hint: top of the line AMD - 100 bucks, Intel -- 500 bucks)

- Cheers
- RLJ

I'm no economist

[sllort]

'We're consolidating all of our offering behind Intel, which was the biggest part of our mix already.'

So, because consumer spending is down, Gateway is discontinuing its' discount line of computers. Because consumers want to buy more expensive computers when the economy is in trouble.

I must be missing something.

While the price war has left scars on each company, AMD's wounds have been more severe than its larger, deep-pocketed rival.

Now is the time for Intel to use all of its' financial muscle to crush AMD once and for all. This is capitalism. If Intel can continue bleeding longer by slashing prices below manufacturer cost, AMD will eventually run out of money. Once the economy picks back up, Intel will look out on the sunny pasture of monopoly, where it can play in peace with Microsoft now that the U.S. government has said "OK" to monopolies.

My advice: buy Intel stock.

Re:I'm no economist

[TheSHAD0W]

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.

big deal

[TheSHAD0W]

Yes, I heard AMD was going to close 2 fabs, and take a $100 million charge against earnings. I also heard it'd save $125 million a year doing it. Getting your money back in ten months isn't a bad thing.

As for Gateway, most of the people who buy them are the ones who are charmed by the sexy "Intel Inside" logo. Those of us who know better don't buy from Gateway anyway.

Incentive

[Rev.LoveJoy]

Stock in Rambus?

... kidding...
- rlj

Just accelerating plans...

[Freedom Bug]

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

Not the end...

[rkischuk]

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.

Gateway wasn't really "selling" Athlons anyway

[pythas]

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."

Talked to an AMD Rep

[strictnein]

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.

Capitalism in Action

[none2222]

The market is always right. If AMD has to close plants and lay-off employees, that means there aren't enough people buying AMD right now. This is what's so great about capitalism. Otherwise, these employees would be sitting around reading slashdot on company time and the plants would be sitting idle. This way, AMD keeps profits up and can survive to compete another day.

I don't see that there is much to worry about here. I'd be more concerned if AMD wasn't laying-off people. As it is, I think people have enough computer power for the time being. How many MHz does the average person/business really need?

There are always going to be adolescents out there who will buy the latest/greatest hardware just for the sake of it(and god bless 'em--they get fleeced and absorb research costs while we level-headed folks get affordable technology); but real people have enough computers right now.

Re:Capitalism in Action

[susano_otter]

The market is always right.

By what standard do you judge that the market is always right? Do you mean it literally? Do you mean it in theory? Do you mean it in practice?

Do you consider the fact that people buy things because they are told to do so by the manufacturer? That the only time a manufacturer needs to consider closing a factory is when they cannot successfully convince people to buy whatever that factory produces?

Are you saying "the market wants more Nikes, therefore it is right that more Nikes be produced and sold"?

I have a difficult time believing that the "market" desire for more Nikes is "right" in any meaningful way.

Re:Capitalism in Action

[zhensel]

Your forgetting that it's mid-september and this kid just aced his first econ 101 test. Let the flurrish of economic knowledge continue.

Here's an Idea

[ClubPetey]

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).

AMD Products

[mach-5]

I will continue to purchase and recommend AMD products for my customers. Just because Gateway is leaving them behind doesn't mean the rest of the world should too. Buy what you think is best, and what you can trust.

Gateway jumps ship again...

[Krieger]

Somehow I'm not surprised. Gateway has been consistently using AMD as a bargaining chip with Intel. They have now twice adopted AMD lines and dropped them when they thought they could get a better deal from Intel.

I suspect that AMD will pull through this, and most likely will re-activate the foundries when they need more capacity, though that might take some time as they still haven't reached 100% at Dresden yet and they're already transitioning to 0.13 micron process.

What does confuse me is why AMD consistently adopts such low selling prices. I think that people would still buy their processors even if they tacked on a minimum of $50 on the high end, if not even $100. A full base system based on AMD costs $400 these days and for that you can't even get a high end P4.

Sometimes the market economy and technology adoption just confuses me. I mean we've had Firewire (IEEE 1394) for almost a decade and it's only just now catching on, and even now with great resistance... go figure.

Apple is

[Ghoser777]

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

I wish people would stop saying the word recession

[Ghoser777]

I remember when Bush kept talking about our economy being on the path to a recession several months ago. It sent chills down my spine everytime he said it. What kept the boom economy of the 90's going was what Alan Greenspan called "Irrational Exuberance" - people where so confident in the economy that they invested more than any economic indicator would have shown.

But now, if we start talking about out economy in a negative manner, we're settings us up for "Irrational Fear," where people think the economy is worse than it really is and pull lots of money out. Just the word recession can get stock holders antsy.

One of the main reasons that several business are now having problems is that a lot of people are holding onto more of their money instead of spending it and putting these people to work. Recession -> hold onto money -> more job cuts -> more recession -> hold onto more money -> ...

I don't have to remind programmers what happens to their apps when they get stuck in infinite loops...

F-bacher

Re:Highly disappointing

[Edmund]

AMD is far from an upstart. They've been making semiconductors since 1969, although most of the initial line was made under license (i.e. they were more of a manufacturer than a maker).

In fact, they have been building chips to fit the PC platform nearly as long as Intel has. Take an old original IBM PC and fit an AMD 8088 clone in it and see what happens. Unfortunately, the inability to deliver a Pentium-class CPU in time (they were WAY behind Intel) hurt their revenue and market share a lot. Intel's "Pentium" name gained worldwide recognition - and left AMD in the dust.

Hopefully, AMD is not done yet, and like with the K5 they will be able to prop themselves up and surge ahead.

Hopefully.

- Ed.

Re:This doesn't mean anything!

[b0r1s]

the ability to overclock a chip says nothing for the quality of that chip .... i've never seen anyone throw away a processor out of a sun box because it couldnt be overclocked... besides, nobody overclocks in real situations, as it's known to cause computational errors. So, go ahead, buy your cheap $50 durons, and coverclock them to your heart's delight, but realize that that is NOT how businesses who buy systems operate, and what works in your house doesnt work for large companies.

Looks like Dresden is their future

[fobbman]

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.

on Capitalism, or Fair Weather Friends

[Zen Mastuh]

I have had my fill of corporate cynicism in recent weeks. For once, I wish owners of corporations would pick a year (this year, maybe?) to not make a profit. Year after year, in all industries, the fruits of innovation and automation flow to the investor class. The flow appears to only go in one direction, for a slight recession and a single day of terrorism have spawned an outbreak of Layoff-itis. People everywhere are being layed off--an action with permanent results--in response to temporary conditions, all to maintain the level of profit that the Leech Class has grown accustomed to.

Now AMD joins the long list of companies perpetrating vast economic terrorism against people whose only crime is filling out a job application and working diligently day after day. Who will feed these 2,300 families and the ~100,000 families who were likewise fucked by the airline industry? Who will comfort the children whose parents commit suicide in desperation?

These are the people who make our laws, fill our heads with memes designed to guarantee permanently increasing profits, poison our water, and drag us into international conflict. Like the gods, they kill us for their sport. Have no sympathy for them--sell off all your stock and kiss those motherfuckers goodbye.

Jesus of Nazareth said something once that has perhaps never been more true: Money is the root of all evil.

Re:on Capitalism, or Fair Weather Friends

[zhensel]

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.

A bit yanked from hardocp.com

[weslocke]

I snatched this from [H]ard|OCP since it was pretty darned relevent.

Regarding the AMD - Gateway stories, just remember that AMD isn't "suffering a blow" per se, as some people have been saying in relationship to this article. PC Sales have slumped BAD over the last year, Gateway and Dell have both been laying people off...etc. These are extremely tough times right now everywhere...not just the PC sector. Things are going to be rough for a while.

In response to stories today about AMD's business relationship with Gateway, please consider the following information:

Gateway continues to sell the Gateway Select 1400, a performance PC based on the 1.4GHz AMD Athlon(tm) processor. ( http://www.gateway.com/home/price/1000_1500.shtml ) AMD plans to continue working with Gateway to determine how AMD can help meet the needs of Gateway's customers. Computer manufacturers refresh their product offerings on a cyclical basis throughout the year. We work with them during each design cycle to determine how AMD's processors can meet the needs of their customers. This is an ongoing process, and we are always competing for business.

AMD's products are used by computer manufacturers around the globe. AMD's OEM partners sell more AMD processor-based systems today than ever before in the company's 32-year history. In the most recently-completed quarter, AMD experienced record unit microprocessor sales of our award-winning AMD Athlon and AMD Duron processors. In addition, AMD's worldwide unit market share for x86 processors has risen from 16.2 percent in Q499 to greater than 22 percent for Q201, according to Mercury Research. AMD today has the most diverse microprocessor portfolio in the company's history. We are providing our partners with leading solutions for desktop and notebook computers, and multiprocessor servers and workstations.

Re:This doesn't mean anything!

[jandrese]

Yes, the extra $400 is worth it to let you forget to install the heatsink.

Granted the thermal protection is a pretty major oversight on AMDs part, but it's not the killer feature in my book. I consider low cost and performance to be the killer features of a processor.

My advice: Install a good heatsink correctly the first time and pocket the difference.

Re:A serious question for PC know-it-alls

[Brian Stretch]

See my homepage, where I detail the parts I used for my 1.4GHz Athlon machine for work. It's the third Athlon system I've built, preceeded by numerous 386/486/Pentium/PPro/K6 systems.

Antec has a new 350W p/s that makes a good, inexpensive choice for a single-CPU system, and they sell a nice midtower case that comes with it. I say "inexpensive" relative to the PC Power & Cooling gear I usually get.

Toy stores: MWave.com for selection, Newegg.com for price. I've bought a lot of stuff from MWave, haven't tried Newegg yet but will next chance I get, they're supposed to be good. EMS Computing has great prices on Antec stuff, I bought from them once, but their site is s-l-o-w.

I first read the topic as

[Yosho]

"AMD to Close Pants, Lay --" at this point I did a double-take and realized my error, but still, it was amusing.

Blame it on the Gateway cow!

[peter303]

In those recent Gateway TV commercial a cow has
been telling the Gateway CEO how to run his business.

Slashbots on the Rampage

[Detritus]

I find it highly entertaining to read all of the knee-jerk responses that say that anyone who buys Intel is an idiot, a victim of Intel propaganda or that AMD is the target of a dark conspiracy. In the real world, there are often other considerations in selecting a CPU other than game benchmarks. If you like AMD systems, fine. That doesn't mean that anyone who makes another choice is a luser.

Go ahead, mod me down. I've got plenty of karma points to burn.