September 26, 2001 – Sunnyvale, CA – Advanced Micro Devices is closing two plants and laying off 2,300 employees, or nearly 15% of its work force, as the chipmaker accelerates cost-cutting moves amid slowing sales of its microprocessors.
AMD said it will close Fab 14 and Fab 15, two manufacturing facilities in Austin, TX, used to make chips for other companies. The company said about 1,000 job cuts will come from the plant closings, with the remaining cuts coming from restructuring at facilities in Penang, Malaysia. The reduction in the work force will be completed by the end of June 2002.
The company said the moves were designed to reduce costs without hurting product development in core businesses.
“We will focus our organization around our two most promising opportunities — flash memory devices and PC processors,” said W.J. Sanders III, AMD’s chairman and CEO.
AMD said it expects to take a charge of between $80 million and $110 million in the third quarter to cover severance packages and other costs associated with the restructuring. AMD expects to save $125 million annually from these changes.
The company said sales for the third quarter are expected to fall 15%, which would result in a loss. It didn’t update this guidance yesterday. AMD is scheduled to report earnings on October 17.
Fabs 14 and 15 are AMD’s oldest and were built in 1984 and 1985, respectively. AMD still has another plant in Austin that makes processors, which it will convert to making flash memory, as well as its most advanced facility in Dresden, Germany.