AMD to cut CPU production

January 26, 2009 | 09:03

Tags: #cpu #credit-crunch #production #shortages

Companies: #amd #intel

If you're hoping that your next upgrade is going to involve an AMD processor, you might have a fight on your hands – the company is going to aggressively reduce the number of chips in the channel.

According to an article over on ExtremeTech, the company is responding to slowing customer demand by massively reducing production for a while – and then resuming production below demand, to ensure that it avoids the trap of excess inventory in these troubled financial times.

AMD's president and chief executive officer Dirk Meyer has said that the move is in response to a “severe industry correction in the IT supply chain, especially in notebooks,” although it is thought that the move is likely to affect supplies of both desktop and laptop oriented processors. Describing the company's aim to as being to have its “inventories drain in Q1 [2009],” Meyer said that company would be “manufacturing below our shipment level” until further notice.

With AMD choosing to produce below market demand – and in doing so avoid the expense of unsold inventory which has to be downvalued and often sold at a loss when demand is misjudged – the company risks alienating customers who, unable to buy AMD processors in the volumes they require, may move to rival Intel, a company which has made no moves to reduce manufacturing rates. With both chip manufacturers entering a price war in the quad-core market, it's going to be interesting to see which tactic wins out.

Do you believe that AMD's move to reduce manufacturing below demand is a sign of desperation, or is it the company's best chance to survive the current economic climate and live to fight Intel another day? Let us know your thoughts in the forums.
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