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AMD To Shed 10% of Its Workforce
stress_life writes "Recent rumors about AMD firing 5% of its workforce proved to be understated. AMD just announced that the company is going to deliver pink slips to 1600-1700 workers, or around 10% of its employees. AMD needs revenue of $2 billion per quarter, but Q1'08 is expected to come in around $1.5 billion. These firings have to be complete by Q3'08, the quarter by which Hector Ruiz promised to be profitable." We most recently discussed AMD's struggles in February.
AMD dies, then Intel will jack their rates up about double.
We saw something like this with Blu-Ray when HDDVD was announced to be dead.
And Via.. Well, they're VIA. Leaves a bad taste in my mouth.
Too bad about the layoffs, though. I think this is going to get worse (across the whole economy) before it gets better. Business is so slow that my state's tax revenues have plummeted.
People that I have talked to in the transportation business seem to think the recession already took place from around mid last year into this quarter, but now they think the economy is recovering. They are basing this on a rather dramatic falloff in freight shipments and then a recovery.
This followed a similar pattern in the early 1990s.. that is, by the time Clinton said "It's the economy stupid", the recession was already technically over. It's just now the pundits and papers need something to scare people with to sell more punditry and their papers.
This is my sig.
I wonder if they will be getting rid of the people who decided to release the Phenom X3s and the energy efficient Phenom X4 with the TLB bug intact? By releasing a lot of new chips at the same time, some with the fix and some without, it seems as though AMD are trying to confuse people into buying buggy chips with awful performance.
Apparently we have to wait even longer before this mess will be cleared up. Is it any surprise that revenue is down?
Well, if your revenue is down, you've got to cut costs in order to remain profitable. Since employees are by far the largest expenditure (ignoring for a second the opening of a new fab), it makes sense to cut costs there. Furthermore, in light of the fact that the last set of products were pretty underwhelming, I'm sure that there was some fat there that needed some trimming.
That said - I agree with your feeling that executives never seem to take responsibility for screw-ups. Instead, they take million dollar golden parachutes into semi-retirement. I'd love to see an exec who says: "Wow, we stunk this year. I'm cutting my salary in half to help the company stay profitable." Or a CEO who says "Wow, we stunk these past two years. I'm obviously the wrong person to run this company, and am forfeiting all salary, bonuses and payments that were supposed to come my way." I guess that technically, the Board of Directors is supposed to do this, but that's a whole different issue.
Those who can, do. Those who can't, sue.
Really depends how they do it. If they say to every middle manager cut 10% of your staff... that's the wrong way to do it That's what 3Com did during the bubble bust (3Who? you say).
If they strategically cut groups that are not performing (including the managers)... that's cutting the fat.
Jack Welch at GE advocated the 20-70-10 principle which says to periodically purge the lowest-performing 10% of employees to keep a company healthy. First, it gets rid of nonproductive employees. Second, *not* firing the lowest 10% is bad for the morale of the top-performing 20%.
AMD did well until recently because, with the Athlon 64, they managed to bring something new fresh, interesting and with good performance :
- x86-compatible 64bits architecture, integrated memory controller, low power and thermal
exactly at a time when intel was stuck in dead ends :
- on one hand Itanium proved not to be the optimal way to bring 64bit to desktops and was stuck in the scientific cluster market
- on the other hand the Pentium 4, which was the CPU equivalent of a hummer, and was unable to go above 3GHz although the NetBurst architecture was planned to reach 10GHz
Intel had to lose time, going back to an older generation (PentiumIII-based PentiumM) and developing a decent workstation & desktop processor out of it (Core 2 was the first decent answer to Athlon 64).
Now we are back to the statu quo. With AMD having some technologically interesting products (true quad-cores) and interesting perf/price ratio in the mid-range products, but other wise no massive advantage.
And Intel throwing tons of resources and replaying the "Gigahertz race", except this time with the number of cores bolted to the same package, offering expensive but fast processors.
*BUT*
AMD could still get some advantage in the near future.
First, the gain obtained by multiplying the number of cores will soon top (My crystal balls predict somewhere around 6-8 cores). Intel is going to hit a wall soon, just like they got stuck with their Gigahertz race.
Second, integrated design with the memory controller on the CPU and a standard bus between the CPU and the rest of the PC seems to make a lot of sense. At least that's what Intel's engineer are thinking.
Here again AMD has some advantages :
They already have such an architecture since Athlon 64, the hypertransport bus has been adopted already by several other constructor for various (FPGA and other accelerators, or simply communication between multiple chipsets on motherboard with several northbridges), their socket has stabilised (thank to the compatible family AM2 => AM2+ => AM3).
Whereas Intel will probably once again lose some time developing and perfect their Quick-Path based processors, probably changing their connector a couple of time along the way (can't technically reuse LGA775, will have to develop a new one and as usually will probably change it a couple of time before stabilising), will have to convince other constructor to adopt it (they will, of course as they are "the standard x86 cpu that every PC maker use". But it'll take some additional time), etc...
Once again we will see a transition at Intel, during which AMD has a small advantage (smaller than with the Athlon 64, but still present).
If they leverage their advantage well (partnerships around the HyperTransport, perhaps), they can achieve some success.
Of course that advantage won't stay indefinitely, and after that Intel will probably be back again with big beasts. Probably by then the technology will better take advantage of bigger multicores. And they'll also have a good advantage in the GPU / GPGPU markets by then.
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
IIRC, Intel took a gamble where AMD assumed far less risk, and that gamble did not pan out. Pentium 4 died, while AMD's Athlon was putting up numbers on par or better. If Intel had continued on in the same vein as the pentium 3 (which they ended up doing after the revelation that P4 was not happening), then AMD would still have been second in performance. Both companies have a place in the market. One just happened to do something stupid, the other just kept plodding along as usual.
You need to restart your computer. Hold down the Power button for several seconds or press the Restart button.
2. Laptops means AMD has to compete on TDP, which has rarely been their strong point*
3. Smaller process and more complex design equals better economics of scale, favor Intel
4. A lot of the "non-mainstream" people are now running Macs = Intel
5. Intel makes killer cheap CPUs by virtue of the small die size for killer margins
* compared to the Pentium 3/Pentium M/Core chips. Netburst was an abomination.
CPUs are one business where if you can't put money into the next generation, you're dead. If AMD don't have the money for new R&D or new fabs, they won't have a cheap processor that does the job. Intel has the power to shipwreck AMD right now, they could ship Atom processors (a 25mm^2 part) for half the listed price, put an Intel chip in every "lowest possible price PC" and still turn a healthy profit (comparing to the die sizes of the other chips, not R&D). Performance is more than adequate and combined with a HD-decoding chip it'll do anything but games. I couldn't find a quote for the die size on AMDs smallest chip but the DC chip is 126mm^2 so >63mm^2 at least. That directly translates to fewer processors per die, lower yield and higher power use.
The only question for Intel is whether they want AMD dead or just crippled so they don't have to deal with heavier monopoly regulation. Remember, even at the height AMD never threatened Intel financially, they always shipped the most CPUs and usually on a process generation better than AMD and so they made plenty money to pour down in R&D even when they fumbled away the performance crown. This time it looks like they've sucessfully boxed in AMD both on the low-power and high-performance end and AMD just don't have the resources to diversify. At least it's somewhat better in graphics where nVidia has really disappointed me with the follow-up since the 8800 release, or they'd have a double crisis on their hands. Heh, if they can make good open-source drivers I'll end up being a complete flip-flop compared to the AMD/nVidia fan I used to be (except the last PC, it's Intel/nVidia...) and become an Intel/ATI fan. Now that I'd have put good money against not so long ago...
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I am guessing that the vast majority of these layoffs are occurring in the west. Most are probably in America with EU taking a number as well. I noticed that AMD has opened a 3rd RD in India and is doing mass hiring.
I prefer the "u" in honour as it seems to be missing these days.