AMD Announces Layoffs As It Struggles To Compete With Intel

Intel’s dominance in the PC space is posing a threat to Advanced Micro Devices (AMD), which has decided to cut its workforce by 5% or 500 employees. This move is a part of AMD’s restructuring efforts for streamlining its business and cutting costs to better compete with Intel.

AMD streamlines operations

AMD’s restructuring plans will record charges of around $42 million, including outsourcing some information technology services and application development. With these cuts, the company hopes to save about $2 million in the third quarter, $7 million in the fourth, and $58 million next year, the Sunnyvale, Calif.-based firm said in a regulatory filing on Thursday.

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Intel’s acquiring of a larger market share in PCs and servers is coming at the expense of AMD, which is losing orders in the declining PC market. Therefore, to make up for the loss in the PC market, AMD is expanding into custom chips, but so far the results have been largely unsuccessful.

Drew Prairie, a company spokesman, said AMD had 9,469 employees when it last reported headcount. The current layoffs will be across the organization, but proportionally fewer engineers will be let go. Prairie said this is an effort to preserve the company’s chip-designing capabilities.

Intel struggles in mobile space

Citing people familiar with the company’s plan, a report from Oregon Live says AMD was considering selling a 25% stake to private equity firm Silver Lake Management, but the negotiations stalled. The two companies failed to agree on a price and strategy, and the discussions were put on hold, the report says. Citing another person, the report says AMD is also considering other strategic options.

Though Intel dominates the PC space, it is still struggling in the mobile segment. Instead of opting for Intel’s x86 Atom processors, Microsoft has gone ahead with Qualcomm’s Snapdragon processors for its new flagship and entry-level Windows 10 Lumia smartphones. A leaked presentation in Spanish about the upcoming Lumia 550 reveals that the device will be powered by a 1 GHz quad-core Qualcomm Snapdragon processor.

On Thursday, AMD shares closed up 1.16% at $1.74. Year to date, the stock is down by almost 34% while in the last year, shares are down by almost 52%. On the other hand, Intel shares closed down 0.46% at $30 on Thursday. Year to date, the stock is down by over 18% while in the last year, shares are down by over 12%.