AMD Does Not Expect Thai Flood to Reduce Demand Towards Its Chips

AMD Does Not Consider HDD Supply a Short-Term Issue

by Anton Shilov
10/27/2011 | 09:27 PM

Advanced Micro Devices does not expect potential shortage of hard disk drives caused by flooding in Thailand to affect its business performance in the fourth quarter. The company projects that existing inventory of hard drives to be enough for Q4 2011 and is more concerned about its own supply problems conditioned by poor yields of 32nm chips at Globalfoundries.

 

"We do not see an impact in the fourth quarter, to be very honest, at least after discussing with our customers. We will have to see how this is going to impact the supply chain moving forward and into 2012. It depends on a lot of things, how long this situation is going to continue, and then how much damage needs to be repaired. But in short term, not much of an impact," said Thomas Seifert, chief financial officer of Advanced Micro Devices, during a conference call with financial analysts.

Due to flooding in Thailand, largest maker of hard drives Western Digital had to close its HDD manufacturing facilities down, while Seagate Technology suffers tight supply of components, which also reduces its output. In case there is a shortage of drives, PC makers will be unable to sell computers and will thus cut orders for microprocessors. Independent analysts believe that there will be enough hard drives for Q4 2011.

Given the fact that AMD's microprocessor manufacturing capacities are constrained by Globalfoundries, who has to fight poor yields of chips made using 32nm process technology and use similar manufacturing tools for both 45nm and 32nm chips, the Sunnyvale, California-based company is more concerned about own ability to ship in quantities rather than the whole PC supply chaing.

"Those supply chains are quite resilient, they are working hard to work around that and make sure that the mix is there. The feedbacks and signals that I have gotten from each of the major players is they are looking for us to improve our execution and deliver more product to them. They see opportunities to continue to deliver and execute, and the flood does not appear to be a major factor at this point. We are going to continue to monitor it, but all indications at this point that this shouldn't be a major impact," said Rory Read, chief executive officer of AMD.