More disturbances in the workforce today as AMD announced they have laid off over 1,400 employees from around the world. This figure includes 300 jobs in Austin, Texas alone. These layoffs will reportedly save the company some $200 million in operating expenses next year.
AMD had about 2,600 workers in Austin before the cuts were announced, and company-wide had just over 12,000.
Austin is home to most of the company’s senior executives and is a major product development and marketing site for AMD.
“This comes after the arrival of a new chief executive and it is after the successful introduction of new products, so it is about right-sizing the company,” said analyst Cody Acree with Williams Financial Group in Austin.
“You don’t cut until you have done all the work you need to get new products out,” he said. “But once you have them out and have identified what you need to do to keep moving forward, then you have more of a reason to go ahead and take job actions. You don’t want to make the cuts before the CEO gets in, and you don’t want to make the cuts before you get the products out. Now that those two are passed, it is time to get the cost structure in line with the rest of the fabless semiconductor industry.
Most successful fabless chip companies have gross profit margins in the range of 50-65 percent, Acree said. Gross margin is sales revenue minus the cost of production. AMD was profitable in its latest quarter, but its gross profit margin was just 45 percent.
Austin is home to most of the company’s senior executives and is a major product development and marketing site for AMD.
“This comes after the arrival of a new chief executive and it is after the successful introduction of new products, so it is about right-sizing the company,” said analyst Cody Acree with Williams Financial Group in Austin.
“You don’t cut until you have done all the work you need to get new products out,” he said. “But once you have them out and have identified what you need to do to keep moving forward, then you have more of a reason to go ahead and take job actions. You don’t want to make the cuts before the CEO gets in, and you don’t want to make the cuts before you get the products out. Now that those two are passed, it is time to get the cost structure in line with the rest of the fabless semiconductor industry.
Most successful fabless chip companies have gross profit margins in the range of 50-65 percent, Acree said. Gross margin is sales revenue minus the cost of production. AMD was profitable in its latest quarter, but its gross profit margin was just 45 percent.