AMD closes two factories, lays off 2,300

Advanced Micro Devices (AMD) will close its two oldest semiconductor wafer fabs in Austin, Texas and restructure its Malaysian operations with the loss of about 2,300 jobs by the middle of 2002, the company said today.

The layoffs will reduce AMD's staff count by 15 percent. About 1,000 of the losses are from the closing fabs, known as Fab 14 and Fab 15, and the remainder from facilities in Penang, Malaysia, the company said in a statement.

Fabs 14 and 15 were built in 1984 and 1985 and were AMD's oldest manufacturing facilities, producing programmable logic devices for foundry customers and some older products that were due to be discontinued. Their closure is not likely to come as a great surprise to most employees, as "older facilities eventually run out of steam," said AMD spokesman John Greenagel.

The semiconductor industry is facing a severe recession, with a year on year decline in demand of 25 percent to 35 percent, said Greenagel.

However, AMD is still optimistic about future demand for PC processors and Austin remains a potential site for a planned 300-millimeter wafer processing fab, due to be producing 5,000 wafers per week by 2004 or 2005, said Greenagel. Austin will, however, be competing with other potential sites including Dresden, he said.

AMD is also restructuring its other manufacturing operations and administration support, with a view to making annual cost savings of $125 million, it said. It will now focus on its most promising opportunities, which are flash memory devices and PC processors, the statement said.

Employees will be entitled to severance packages and outplacement services "conforming to competitive practice worldwide," Greenagel said.

AMD will take a one-time charge of between US$80 million and $110 million, covering the restructuring and other special charges, according to the statement.

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