Globalfoundries has named former Cypress Semiconductor executive Jim Kupec to its top marketing position, as the newly established company begins to assemble its executive team.
Globalfoundries is the chip manufacturing company recently formed by a joint venture between Advanced Micro Devices and Advanced Technology Investment Company (ATIC).
Kupec spent 15 years with Cypress Semiconductor, rising through a variety of engineering, operations, and management positions to the role of senior vice president, according to a statement from Globalfoundries.
After leaving Cypress, Kupec became president of United Microelectronics Co. (UMC) USA. Taiwan-based UMC is one of the largest contract chip manufacturers in the world and competes with Taiwan Semiconductor Manufacturing Co. Globalfoundries will compete with both of these companies for customers.
Most recently, Kupec served as chief operating officer of eSilicon, an ASIC (application-specific integrated circuit) design and manufacturing services company.
"The addition of Jim's extensive foundry experience, on both the supplier and customer side of the business, underscores our commitment to building a world-class global foundry services provider," said Doug Grose, CEO of Globalfoundries, in a statement.
Advanced Micro Devices said Monday that it will incur $70 million in restructuring costs in the fourth quarter, according to a filing with the Securities and Exchange Commission.
The filing also cited fourth-quarter layoffs of 600 employees. An AMD spokesperson said that approximately 500 layoffs were announced in November, but that the company "ended up closer to 600."
The restructuring dollar figure is new, AMD said. The company now estimates that the "restructuring expense that it will record in the fourth quarter of fiscal 2008 will be approximately $70 million, based on the restructuring plan approved by the Company on December 19, 2008."
Of the $70 million, about $34 million is related to severance and employee benefits, $13 million is related to contract or program termination costs, approximately $17 million is connected to asset impairments, and about $6 million is related to exit costs at facilities.
Previously, AMD had reported in a Form 10-Q filing that it expected to cut approximately 500 employees and take a charge to operations in the fourth quarter of fiscal 2008 of approximately $50 million.
Future cost reductions are also planned. "Further cost reduction actions will result in additional charges in the first half of fiscal 2009, which the company cannot estimate at this time," according to Monday's Form 8K filing.
AMD also said that on December 19 it determined that it would incur a material charge for impairment of assets during the fiscal quarter ended December 27 related to the 2006 acquisition of ATI Technologies. "The Company concluded that the current carrying value of its goodwill...was impaired." AMD added: "This conclusion was reached based on the results of an updated long-term financial outlook for the businesses of the former ATI Technologies Inc. in light of the current market conditions and economic outlook" and "due to the deterioration in the price of the Company's common stock and the resulting reduced market capitalization."
AMD expects that the impairment charge "will be material, but, as of the time of this filing...is unable to estimate the amount or range of amounts of the impairment charge. The Company will disclose such an estimate or range of estimates in a filing with the SEC promptly and in any event within four business days of determining such an estimate or range of estimates," according to the Form 8K.
The Sunnyvale, Calif.-based chipmaker split in two earlier this year in order to defray the burdensome costs of its manufacturing operations. The manufacturing operations received a massive investment from Mubadala Development Co. and is now run as a separate concern called The Foundry Company.
The price of its stock has sunk from about $6 in June of this year to a little more than $2.
Advanced Micro Devices talked more about options for reducing its participation in a new manufacturing venture during its third-quarter earnings call on Thursday. The chipmaker also offered more details on conversion to 45-nanometer processors.
AMD 45-nanometer die
(Credit: AMD)Earlier this month, AMD announced that it was splitting into two companies: one for designing chips (AMD), the other for manufacturing them (The Foundry Company). The latter company will be owned approximately 56 percent by Advanced Technology Investment Co. (ATIC) and 44 percent by AMD.
During the conference call, AMD Chief Financial Officer Bob Rivet responded to a question from an analyst about an "exit strategy" for the foundry (manufacturing) side of the business by saying that AMD will "turn in more shares and ownership of the company" if necessary.
As Rivet put it, the foundry deal provides that "when a capital call is required for the foundry business, it allows us to either pay our fair share of that capital call or turn in more shares and ownership of the company...We'll make that determination at each point in time...There's a natural way to get out of it if we want to."
All of this--whether accounting is done on a consolidated or nonconsolidated basis--can get a little confusing for nonaccountants (and AMD even volunteered that it's "confusing") but Rivet put it this way. "Think of it this way: The Foundry Company piece of the bucket will have profits and losses...but they're all cashless. The cash generating machine of AMD is the AMD design product (company)."
Both Rivet and CEO Dirk Meyer also discussed AMD's conversion to 45-nanometer chips. "We'll be fully converted in first half of next year," said Meyer. Rivet added that it will be a "very fast ramp" to 45 nanometer chips. AMD is currently shipping processors based on 65-nanometer technology. Smaller geometries typically result in faster processors that use less power.
Speaking about AMD's 45-nanometer Shanghai server processor, Meyer said, "You'll see OEM (server) systems in the market this quarter," and added that AMD is "shipping the desktop variant this quarter and you'll see OEM systems in the market early next quarter."
Responding to a question about AMD's Netbook chip strategy and its response to Intel's Atom processor, Meyer said: "Clearly the Netbook is a new form factor and new market opportunity and one we're not participating in right now, today."
He said more details will come at an upcoming analyst meeting. "We do have strategies together with our OEMs for pushing solutions both down into smaller form factors and lower notebook price points."
Advanced Micro Devices reported a much smaller loss for the third quarter and better-than-expected revenue.
The Sunnyvale, Calif.-based chipmaker reported third-quarter 2008 revenue of $1.776 billion, including process technology license revenue of $191 million.
Revenue increased 32 percent compared to the second quarter of 2008 and 14 percent compared to the third quarter of 2007.
A positive surprise is the net loss, which was significantly smaller than expected. The company reported a net loss of $67 million, or 11 cents per share. Analysts polled by Thomson Reuters had expected a third-quarter loss of 40 cents per share on $1.48 billion in revenue. The company also reached operating profitability in the quarter.
Analysts were impressed by the numbers. "Even in a normal environment this would be a pretty remarkable achievement. In today's environment, it's extraordinary," said Ashok Kumar, an analyst at investment bank Collins Stewart.
"Improved execution across all of our businesses," Robert J. Rivet, AMD's chief financial officer, said in a statement, "was punctuated by a refresh of our graphics product line-up, driving 55 percent sequential revenue growth and market share gains. In addition, customer adoption of our quad-core microprocessors was strong, with unit shipments increasing 46 percent sequentially."
In the second quarter of 2008, AMD had revenue from continuing operations of $1.349 billion and a net loss of $1.189 billion. In the third quarter of 2007, AMD had revenue from continuing operations of $1.558 billion and a net loss of $396 million.
Third-quarter 2008 gross margin was 51 percent, or 45 percent excluding process technology license revenue. This compares favorably to both the second-quarter 2008 non-GAAP gross margin of 37 percent, and the third-quarter 2007 gross margin of 41 percent.
"We achieved a significant milestone with the recent announcement of our Asset Smart strategy, which will transform both AMD and the industry," Dirk Meyer, AMD's president and CEO, said in a statement.
Earlier this month, AMD announced that it was splitting into two companies: one for designing chips (AMD), the other for manufacturing them (The Foundry Company). The capital-intensive business of manufacturing chips had been weighing on AMD as it reeled under a $5 billion debt load, partially due to its purchase of ATI Technologies in 2006.
The investment is expected to allow AMD to remain directly involved in chip manufacturing--crucial for competing with Intel.
AMD said it has secured $5.7 billion of "confirmed, pledged investment," with some of the money earmarked for a future manufacturing facility in Malta, N.Y. It will own part of the new manufacturing entity, and Advanced Technology Investment Co. (ATIC) will own the rest.
In addition, ATIC will commit a minimum of $3.6 billion and up to $6 billion in additional funds over the next five years for the upgrade and expansion of fabrication facilities in Dresden, Germany, and construction the Malta, N.Y., facility.
One of the largest investors, Mubadala Development, now owns 19.3 percent of AMD.
Advanced Micro Devices chip plant spin-off rumors won't die. Probably because they may be partially--or more than partially--true.
AMD Dresden facility to be spun off?
(Credit: AMD)But the timing is the big unknown. AMD claims the launch of its so-called Asset Smart strategy is not imminent.
The latest rumor was triggered by a blog at the Austin American Statesman that said AMD may "spin-off of its manufacturing operations within two weeks." The blog cites a Wall Street securities analyst, John Lau with Jefferies & Co.
AMD said that's not so. "We hope to get it done by the end of the year. There's been no change on our end," said Drew Prairie, an AMD spokesman.
"I wouldn't expect an urgent phone call from me in the next two weeks," he said, implying that the timing would not be in this time frame.
AMD has two chip factories in Dresden, Germany, that are at the center of the spin-off speculation.
Prairie also cautioned that speculation about the structuring of the spin-off may not be accurate. "I wouldn't take that assumption from (analysts) as definitive. There's a lot of nuances and gray areas, as to what we're going to be doing. A lot the speculation is painting things as black and white. I don't think, come announcement day, it will be that black and white."
He also reiterated that the proposed chip plant in upstate New York "would be a critical part of our manufacturing."
Analysts have also speculated that AMD may receive funding along the lines of the $622 million investment AMD received from Mubadala Development Co., the investment arm of the Abu Dhabi government.
IBM may play a small role in the Asset Smart strategy also. Currently, AMD and IBM do joint research and development on next-generation chip technology in a location close to the proposed AMD chip facility in Malta, N.Y.
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