Price war forces AMD into reorganisation

AMD has launched a reorganisation to curb a sharp drop in the company's revenues in the previous quarter.

AMD on 19 April is scheduled to release earnings for the quarter that ended on 31 March. The company expects of about $1.225bn, falling short of analyst expectations by more than $200m.

The chipmaker plans to cut spending on capital expenditures by $500m. It also has instated a hiring freeze except for critical positions and will cut so-called discretionary expenses.

AMD didn't provide any details on which areas would be affected by the cuts. Discretionary spending is considered an expense for non-essential items or for services that are more expensive than necessary. Capital expenditures represent money spent to upgrade physical assets such as buildings and machinery.

The company stressed that the cut-backs won't materially impact chip capacity plans for the year.

The chipmaker blamed its revenue drop on a prolonged price war with Intel. After seeing its market share slip, Intel last summer drastically lowered its chip prices. This forced AMD to follow suit.