AMD reports gloomy figures for the third quarter of the year - forms new company with Fujitsu

It is still an uphill battle for processor maker AMD, which is going through one of the company’s most difficult years to date. The company is now reporting further losses for the third quarter of the year and at the same time announcing that a significant part of the business amounts to a new company.

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1 AMD forms new company with Fujitsu

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	Q3 2015	Q2 2015	Q3 2014
Income	$ 1.06 billion	$ 942 million	$ 1.43 billion
Operating profit	– $ 158 million	– $ 137 million	$ 63 million
Net profit	– $ 197 million	– $ 181 million	$ 17 million
Gross margin	23%	25%	35%

For the third quarter of the year, AMD raises revenue to $ 1.06 billion, in line with the company’s forecasts. However, the company’s gross margin continues to shrink and is now down to only 23 percent, which combined with an inventory write-down of 65 million for older APU circuits gives a net loss of 197 million.

The reason for AMD’s results is again the Computing and Graphics division, which includes processors, control circuits and graphics cards. Although revenues rose by 12 percent from the previous quarter, they are down 46 percent on an annual basis. The division makes a loss of $ 181 million, part of which is the APU write-downs.

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The company’s for-profit bright spot is again Enterprise, Embedded and Semi-Custom, which includes processors for Playstation 4 and Xbox One. Here, sales rose by 13 percent to $ 637 million before Christmas trading, for an operating profit of $ 84 million – up from the second quarter’s 27 million and down from 108 million on an annual basis.

However, the increase on the revenue side is seasonal and for the fourth quarter of the year, AMD forecasts a decline of 10 percent (plus-minus 3 percent).

AMD forms new company with Fujitsu

In connection with the quarterly report, AMD announces that together with Nantong Fujitsu Microelectronics (NFME) they are forming a new company, where the latter pays 371 million dollars for a co-ownership of 85 percent.

The new business, which does not yet have a name, will handle ATMP (Assembly, Test, Mark, Pack) for AMD. Here, finished silicon wafers from AMD’s partners, such as TSMC and Globalfoundries, will be cut down to individual circuits, tested and finally assembled to become a finished product for the end customer.

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For AMD, this means that 1,700 employees and factories in Penang, Malaysia and Suzhou, China are no longer part of the core business, but will be transferred to ATMP. NFME also assists with its own facilities and employees, which means that the company includes a total of five facilities and 5,800 employees.