Chip war forces AMD into the red

AMD described its first-quarter performance as 'disappointing and unacceptable'

Chipmaker AMD has posted a $611m net loss for the first quarter of 2007, as the company struggles to compete with Intel.

AMD warned earlier this month that its revenues would fall short of the company's forecasts by about $400m. The chipmaker reported first-quarter revenue of $1.23bn, down 30 per cent on the previous quarter.

"After more than three years of successfully executing our customer expansion strategy and significantly growing our unit and revenue base, our first quarter performance is disappointing and unacceptable," said Robert Rivet, chief financial officer at AMD.

AMD announced a corporate restructuring earlier this month that will cut costs by $500m a year. But Rivet stressed that customers remain confident about the company's strategic direction and products.

At the time AMD blamed its revenue drop on increased competition from Intel and at the same time slashed its prices by up to 40 per cent in an attempt to grow its market share.

The chipmaker lost nearly $574m in the previous quarter, $551m of which was related to the acquisition of ATI. The takeover and integration of the graphics chip maker accounted for $113m in costs in the first quarter.