AMD faces US$50M bill for restructuring

Cost-cutting measures mean the chipmaker, which has lost ground to Intel, will have a multimillion-dollar outlay in the first three months of this year.
Written by Colin Barker, Contributor

AMD expects to spend US$50 million in the first quarter on restructuring its business, the chipmaker said in a regulatory filing last week.

Of that US$50 million in estimated restructuring charges, about US$23 million will go to severance, expenses and costs related to employee benefits, the Californian company said in a statement filed with the Securities and Exchange Commission. Another US$13 million or so will be spent on contract or program termination. AMD expects asset impairment expenses to total US$7 million, and the cost of closing or consolidating facilities to cost US$7 million.

The moves are part of a business restructuring plan adopted by AMD in December. In its SEC filing, the company said it anticipated more expenses related to its cost-cutting program in 2009.

In January, AMD announced that it was going to cut its workforce by 9 percent--around 1,100 people. It also said it would introduce temporary salary cuts for some of its most senior executives.

AMD is currently having a tough time in its battle to remain competitive with the microprocessor market leader, Intel. According to research company iSuppli, the chipmaker saw its market share fall to 10 percent in the fourth quarter of 2008, from 14.1 percent a year earlier.

AMD's rival Intel, on the back of growing sales of its Atom processor for netbooks, saw market share rise to 81.8 percent in the same quarter, from 78.4 percent a year earlier.

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