PC sales have not been brisk this year, with no uptake coming from the introduction of Windows 8 or increased holiday sales. In response, AMD has cut their orders for silicon wafers from Global Foundries by 75% for the last three months of their 2012 fiscal year. Instead of paying $500 million for the chips, AMD will only order $115 million dollars worth, but will face a $320 million dollar penalty for amending their purchase agreement. All of this is being done to retain cash supplies in hand. AMD interim Chief Financial Officer Devinder Kumar said, "Liquidity and cash management remain a key focus for AMD."
AMD has been caught between the low demand for PC's over the last few years, and strong competition from Intel and Nvidia. While the graphics division within AMD has remained competitive to Nvidia, and their APU chips have shown superior performance for a cpu + integrated graphics processor, AMD's main cpu lines have floundered. They have been relegated to lower priced computer lines, and the profits are razor thin for AMD.
Combine this with an increased demand for tablets and other mobile devices where AMD has very little to offer, and the future is looking bleak for AMD. A complete collapse of the company would result in even less competition for Intel, and less need for Intel to moderate their prices.
Even with this latest financial maneuver, AMD will not return to profitability for at least a year, even if all goes well in their planning and performance.
You can read the announcement from AMD here.
And Ars Technica has a brief article on this latest move from AMD as well.
