AMD Prepares 'Big' Announcement

Advanced Micro Devices, continuing to struggle to compete against its far bigger rival Intel, has scheduled a "significant," corporate announcement for Tuesday at 5 a.m. PDT.


Seeing that Hector Ruiz has already ceded day-to-day control of the sagging company to CEO Dirk Meyer, it's likely that this announcement will center on the company's manufacturing structure instead.

There has been enormous speculation that this company would phase out its chip-making plants -- and the massive expenses associated with keeping them operational -- to become a fabless chipmaker instead. Many experts have suggested that it would be just a matter of time before AMD phased out all manufacturing so it could instead focus its efforts -- and dwindling resources -- on microprocessor design instead.

My sources are telling me that indeed AMD will be spinning off ALL its chip manufacturing so it can focus on chip/processor design. If this is the case -- widely expected -- it could lead to thousands of layoffs and the shuddering of some sizeable AMD fabrication facilities around the world.

The hitch so far to this plan: AMD is strapped for cash as its share price continues to plunge. That alone has made it impossible for AMD to afford the massive severance it would be forced to pay out if it were to shut down manufacturing.

It's not clear how the company has figured out how to overcome that hurdle. It's possible that AMD has secured more off-shore financing (possibly from its white knights in Abu Dhabi who took an 8 percent stake in the company last November) to get the deal done.

This company is in desperate need of a massive restructuring. Not just leadership, but its actual business. It might indeed be time for that bold, massive step.

I could be way off here, but that's what my sources are telling me tonight. We'll see Tuesday.

Questions? Comments?