The computer chip manufacturer Advanced Micro Devices or AMD has released yet another grim report on its takings this quarter. This now make sit six reports in a row that AMD has clearly been losing its market share to rivals Intel, despite better sales than this time a year ago. The twenty two percent increase in sales on this time last year however was not even enough to break even as the chip company had to divulge information it had lost £180 million in the last three months.
The plight of AMD is not representative of the technology industry as a whole. While sales have suffered across the board for AMD, other companies such as Intel have released positive reports of earnings for the same period. This does not bode well for AMD employees worldwide; around ten percent of workers will be axed equating to around sixteen hundred jobs. The Chief Exec of AMD, Hector Ruiz said that this was only a precursor to what would be a major restructuring effort.
The problem for AMD is that rivals Intel have made technological advances that have been hard to compete with. The latest of these advances is a microchip a microscopic 45 nanometres thick. Intel are not completely outdoing their competition however, despite great technological advances they also experienced a drop in profits, believed to be around twelve percent.
Another rival, Sandisk who make memory cards and chips also outdid AMD in terms of profits taken for the quarter. The memory chip manufacturer announced profits of nearly £18 million despite a serious drop in the cost of memory cards. It is now believed that the cost per megabyte has dropped by over sixty percent in a year, Sandisk are optimistic that the fall in prices would level out over the next twelve months.
For AMD, the restructuring effort needs to be put into effect efficiently and quickly, lagging so far behind in the technology industry can sometimes be seen as a precursor to defeat. Intel; with the production of evermore advanced chips could well destroy AMD’s market share. Hopefully Mr Ruiz has a plan to pull this flagging company from the brink and return it to prosperity.
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