AMD lays off 15 percent, eyes embedded push

'Tough spot'

For the fourth quarter, revenue will decrease 9 percent sequentially, plus or minus 4 percent, with flat operating expenses, the company said.

Among the highlights from AMD's results were:

• Gross margin (31 percent) decreased sequentially due to an inventory write-down of approximately $100 million primarily consisting of first generation A-Series Accelerated Processor Units (APUs) (“Llano”), weaker-than-expected demand.
• Computing Solutions segment sales dropped 11 percent sequentially and 28 percent year-over-year.
• Graphics segment revenue decreased 7 percent sequentially and 15 percent year-over-year. Graphics processor unit (GPU) revenue decreased 14 percent sequentially due to lower unit shipments to OEMs partially offset by higher channel sales. 
• Trinity APU sales jumped 70 percent in the third quarter, and constituted a third of notebook shipments for the company. 
• AMD is getting first silicon back on its Kabini SoC and represents the company's "first true SoC design." The device is "on track" to launch in the first half of 2013.
• AMD expects the embedded market to constitute 20 percent of its quarterly sales by Q4 2013, up from 5 percent today.

"They're in a tough spot right now," said Patrick Moorehead, president and principal analyst with Insights & Strategy (Austin, Texas). "It's the economy which is hurting them the most, and the percentage of sales they get from consumer is dramatically higher than that of Intel."

Embedded upside

Acknowledging that the PC segment will be weak for at least several more quarters, Read sketched out a push into embedded areas that will leverage IP and emerging processor technology to quadruple the percentage of AMD sales from the embedded market in the coming year.

"Our low-power APUs, graphics IP and reusable design blocks give us a distinct advantage to build semi-custom APUs for new embedded markets," Read said. He said AMD would target embedded markets such as communications, industrial and gaming in this push. This "will outpace the PC growth for the foreseeable future," he added.

Read said AMD APUs have a "number of confidential, high-volume wins," but he refused to discuss specifics.

Lisa Su, senior vice president and general manager, global business units, added, "The key differentiator we have is really in the high-performance design methodology, microprocessor technology as well as the graphics IP that we have."

When pressed Su declined to name potential competition for AMD in the embedded sector.

Related stories:

• Can Windows 8 rescue the PC?
• AMD plugs Trinity into embedded systems
  
• AMD warns of Q3 shortfall
• AMD's Jaguar packs four cores in one for mobile