AMD expects weaker sales on slow PC market

 

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By Reuters and Nicole Kobie

Posted on 25 Jan 2012 at 09:50

AMD expects sales to fall as a shortage of hard drives and a shaky economy hurt PC makers.

The PC chipmaker posted a 2% rise in revenue but predicted next quarter's sales would slide 8%.

Like larger rival Intel, AMD has been wrestling with slow demand for chips as consumers increasingly buy Apple's iPad instead of laptops.

AMD depends more on sales of PC processors for its revenue than Intel, which sells proportionally more chips for servers. It grew its PC chip revenue 2% sequentially in the fourth quarter, while Intel's PC chip business dipped slightly during the same period.

We are building an AMD that consistently delivers on its commitments

"They did slightly better than Intel in Q4 in their PC business but they have to show that consistently over a few quarters for investors to give them credit," said CLSA analyst Srini Pajjuri.

Also hurting sales of processors, PC manufacturers have been struggling to obtain enough hard drives to meet production targets after flooding last year ruined factories and sensitive machinery in Thailand, the world's second largest exporter of the components.

CEO Rory Reid said AMD has corrected a problem with the production of its 45 nanometer chips that hurt output in recent quarters and expects a rebound in production in the current quarter.

"We begin 2012 clear on our priorities and opportunities," Reid said. "We are building an AMD that consistently delivers on its commitments.”

Apple challenge

With PC sales suffering, AMD and Intel have failed to find a foothold in smartphones and tablets, where processors based on ARM's power-efficient chip designs are widely used.

Apple became the largest buyer of semiconductors last year, overtaking Samsung and HP as sales of iPads and iPhones outpaced PCs and other consumer gadgets, according to market research firm Gartner.

AMD said revenue in the fourth quarter rose 2% from the year-ago period, to $1.69 billion. But it said revenue in the quarter ending in March would fall 8% from the previous quarter.