AMD to cut 1,100 workers and will further write down its ATI Technologies acquisition

Advanced Micro Devices Inc. plans to cut 1,100 jobs, write down the value of an ill-fated Canadian acquisition and slash the remaining employees' pay as the chip maker hopes its third round of layoffs in a year can help it get through a brutal market for computer sales.

The Sunnyvale, Calif.-based company said on Friday that 900 workers will have their positions cut. The rest of the reductions are coming from attrition and the previously announced sale of a business unit.

AMD also revealed in a regulatory filing that it plans further write downs on the value of ATI Technologies Inc., a Toronto-area graphics chip maker AMD acquired a few years ago for US$5.6 billion.

The U.S. technology company said it's reducing ATI's value by an additional US$684 million, which will appear in the quarterly results next week. AMD had previously slashed ATI's value by nearly $2.5 billion.
Taken together, the charges now mean AMD believes ATI is worth less than half what it paid for the Canadian company.

Friday's cuts at AMD affect nine per cent of the company's workforce.

The company has 15,000 workers currently, but it is spinning off its manufacturing operations, which have 3,000 employees who are not affected by Friday's announcement. So AMD's cut of 1,100 jobs amounts to nine per cent of the remaining 12,000 workers.

The firings represent AMD's third round of major layoffs in the last year. AMD cut 600 workers just last month, and earlier in 2008 jettisoned 1,600.

Pay for workers who survive the cuts will shrink. AMD's CEO Dirk Meyer and executive chairman Hector Ruiz, the former CEO, will see their salaries slashed by 20 per cent. Vice-presidents and other top management will have their pay cut 15 per cent, other salaried workers will lose 10 per cent of pay, and pay for hourly workers will fall five per cent.

AMD said the pay cuts are temporary. AMD was not specific about how pay would be cut in other countries.

AMD shares fell two cents, or 0.9 per cent, to US$2.24 in trading Friday on the New York Stock Exchange.

AMD is in the throes of a big restructuring that has seen it change CEOs, sell nearly a fifth of the company to an investment arm of the Persian Gulf state of Abu Dhabi, and agree to break off its factories in a moneysaving move.

AMD is the smaller rival of Intel Corp., the world's biggest semiconductor company, and has struggled with product delays, huge debt from its ATI Technologies takeover, and the inability to outspend Intel on developing new technologies.

AMD's announcement came a day after Intel reported fourth-quarter profits dropped 90 per cent and sales fell 23 per cent, a sign of the severity of the slowdown facing both companies, which provide nearly all the microprocessors for the world's PCs.

AMD, which reports its fourth-quarter results next Thursday, has already warned that its sales will come in 33 per cent lower than a year ago. Over the last eight quarters, AMD has lost $5.6 billion, and analysts aren't expecting relief any time soon.