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Forums - PC Discussion - AMD Reports $590 Million Loss Due to Breakup with GF

Scoobes on 20 April 2012

Title says it all really. AMD pulling out of the deal with Global Foundries has cost them rather a lot. This is only a one off cost so I think the future is still pretty rosy for AMD, especially in the GPU space. Plus they'll (likely) be providing all the GPU chips for the consoles and possibly even an APU or CPU for the next Playstation.  Anyway...

Source:

http://www.tomshardware.com/news/amd-globalfoundries-28nm-radeon-processors,15404.html

AMD has taken an expected hit on its Q1 quarter earnings as a result of the decision to buy itself out of a manufacturing agreement with Globalfoundries. The agreement would have given Globalfoundries exclusive manufacturing rights of AMD 28 nm APUs.

The $703 million payment drove AMD to a $590 million loss for the second quarter 2012. Revenue was down 2 percent year over year to $1.59 billion. Non-GAAP net income was $92 million, up from $56 million in Q1 2011. AMD also noted that its cash reserves declined by $201 million to $1.71 billion, which was due to a $281 million cash payment in the SeaMicro acquisition and a $150 million expense due to wafer supply in 2012. AMD previously said that the total cost of SeaMicro will be $336 million.

CEO Rory Read said that AMD was able to meet customer demand for 32 nm products in the first quarter as 32 nm processor supply improved. AMD was able to ramp its APU share in mobile processors to "nearly 100 percent" and achieve 30 percent unit growth year over year. While not explicitly stating that AMD is focusing on the very low end of the notebook market, Read said that "APUs continue to increase as a percentage of […] top-selling notebook SKUs in North America, priced at about $400." Bulldozer cores accounted for the first time for more than 50 percent of AMD server CPU revenue and unit shipments in the quarter. Read noted that demand for AMD GPU is "strong" and that he was "happy" with 28 nm chip supply.

For the second quarter, AMD expects revenue to increase about 3 percent sequentially as Trinity and Brazos 2.0 will launch "later this quarter".




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Millenium on 20 April 2012

That's a hefty cost, I'm wondering why they pulled out of the agreement though?

They should do fine for the rest of the year I guess.



NightDragon83 on 20 April 2012

Anyone else think that AMD broke up with their girlfriend after reading the headline? lol.



On 2/24/13, MB1025 said:
You know I was always wondering why no one ever used the dollar sign for $ony, but then I realized they have no money so it would be pointless.

wfz on 20 April 2012

Who knew breaking up with your girlfriend could be so costly.

Sheesh..women..



Millenium on 20 April 2012
wfz said:
Who knew breaking up with your girlfriend could be so costly.

Sheesh..women..



Never get married eh, contracts are costly to break



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Darth Tigris on 20 April 2012
NightDragon83 said:
Anyone else think that AMD broke up with their girlfriend after reading the headline? lol.


Sure did, lol.



Soleron on 20 April 2012

Yeah this isn't a problem for them, analyst outlook is still positive.

Amusingly after this breakup and costs, they announce all the stuff that would have been fabbed at TSMC (Bobcat successors) are now going to be made at GF. The charge was taken to give them the option of not using GF but they will anyway.

I feel certain in saying AMD will never win the desktop or server markets again, they need to refocus on being profitable in areas Intel has problems with (cheap laptops with good graphics, and servers with lots of tiny cores)



Scoobes on 20 April 2012
Soleron said:
Yeah this isn't a problem for them, analyst outlook is still positive.

Amusingly after this breakup and costs, they announce all the stuff that would have been fabbed at TSMC (Bobcat successors) are now going to be made at GF. The charge was taken to give them the option of not using GF but they will anyway.

I feel certain in saying AMD will never win the desktop or server markets again, they need to refocus on being profitable in areas Intel has problems with (cheap laptops with good graphics, and servers with lots of tiny cores)

That's hilarious, but at least they have the option of not using GF!

I agree with your assesment too. AMD have a big advantage over Intel in cheap laptops with good (relatively) graphics but unfortunately, it doesn't look like they'll be too competitive in the power desktop/server segments unless Intel really drops the ball like they did with Pentium 4.




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darkknightkryta on 20 April 2012

After bulldozer I think AMD needs to start hiring better engineers.



Scoobes on 21 April 2012
darkknightkryta said:
After bulldozer I think AMD needs to start hiring better engineers.

It's unlikely AMD will be able to compete on power now with the resources Intel has. They've pretty much admitted as much now.

They gambled on software being heavily multi-threaded with Bulldozer and it's backfired. It may still give them a decent starting platform when software does become more multi-threaded though.




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