A.M.D., Citing a Slowdown, to Cut 1,650 Jobs

By JOHN MARKOFF

Published: April 8, 2008

SAN FRANCISCO — Advanced Micro Devices said it would cut about 1,650 workers — about 10 percent of its work force — because of deteriorating business conditions across its units around the globe.

The layoffs may be one of the first signs in Silicon Valley of an economic slowdown that has already affected other industries in the United States. As recently as December, many Silicon Valley executives were stating that they believed that high technology industries would be saved from a downturn.

Several analysts said that A.M.D., based in Sunnyvale, Calif., was facing problems largely because of a resurgent Intel, the world’s largest chip maker. A.M.D. lost market share to Intel last year and has also delayed shipping a new line of microprocessors, though it has said it has worked out those problems.

“I think this is mostly about A.M.D.,” said Martin Reynolds, a vice president at the Gartner Group, a market research firm. “I don’t think the tech economy has gone in the tank yet, but we will be watching closely as firms report in the coming weeks.”

There are some signs of a slowdown among tech companies. Intel has said weaker pricing for NAND flash memory would affect its profit margins. And on Monday, iSuppli, a market research firm, said it cut its forecast for the global NAND flash memory market. It expects revenue will grow 9 percent in 2008, a sharp revision from its earlier prediction of 27 percent growth. ISuppli blamed weaker consumer spending. It singled out less demand for flash memory from Apple, maker of iPods and iPhones, and SanDisk, the single biggest buyer of flash memory.

A.M.D. makes chips for computers and servers and has a minority stake in the flash memory maker Spansion.

A.M.D. also revised downward its financial guidance to Wall Street analysts, stating that it expects its revenue for the first quarter, which ended on March 29, to be about $1.5 billion. That is an increase of 22 percent over the first quarter of 2007 but a 15 percent decline from the previous quarter. Analysts surveyed by Thomson Financial had forecast higher quarterly revenue, at $1.62 billion.

The company said it had not yet estimated the revamping charge it planned to take as a result of the new round of layoffs, which a spokesman said would take place before the beginning of September. A.M.D. said that it would offer details when it reported first-quarter financial results on April 17. Analysts have estimated a net loss of $263 million, or 42 cents a share.

The company, which has its most advanced factory in Dresden, Germany, and other offices in Austin, Tex., has about 16,800 employees.