Slashdot Mirror
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.'"
They can still enter the 'heating componment' market.
Je t'aime Stéphanie
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.
What's your damage, Heather?
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'
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
'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.
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.
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
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
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.
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.
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
James Tiberius Kirk: "Spock, the women on your planet are logical. No other planet in the galaxy can make that claim."
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.
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.
Mooniacs for iOS and Android
Your forgetting that it's mid-september and this kid just aced his first econ 101 test. Let the flurrish of economic knowledge continue.
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.
In those recent Gateway TV commercial a cow has
been telling the Gateway CEO how to run his business.