AMD’s joint venture will be with Nantong Fujitsu Microelectronics Co., Ltd. It is said to be a $436 million agreement which combines AMD’s high-volume ATMP facilities with Nantong Fujitsu Microelectronics’ OSAT expertise, and is said to be the latest step in AMD’s strategic transformation.
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AMD’s formal headquarters are in Sunnyvale, Calif., but Austin is where most of its senior executives live and much of its engineering is done.
For the fourth quarter, AMD said it expects sales between $955 million and $1.03 billion, compared to the consensus $996.19 million. Going forward, AMD will be a smaller company, and it will have to rely on outside firms, including this joint venture, to handle assembly and test duties for its chips.
AMD also said the deal will significantly cut its capital expenses.
“This portfolio is not broadly licensed and could provide a significant source of revenue for years to come”, she said.
AMD has recalibrated and restructured during its recent string of losses, but it also has made a point of retaining engineering talent and has rechanneled its efforts and research toward a new set of advanced processors due out in 2017. A year ago, that division was pulling in $781 million in revenue, though it reported a loss of $17 million.
AMD has been trying to reduce its reliance on PC sales, developing chips for gaming systems and customized chips to order for other suppliers.
On the books the company had $755 million in cash, equivalents and marketable securities at the end of the third quarter compared to $1.04 billion at the end of December 2014. Sales in the unit that includes those chips decreased 2% from the year-earlier period but increased 13% from its second quarter.
Last month, AMD moved to lay off about 500 workers and outsource services as part of a broader realignment.
On an adjusted basis, AMD posted a loss of 17 cents per share.
Analysts surveyed by Thomson Reuters had projected a 12-cent loss on $995.9 million in revenue. Nantong will have an 85% stake in the JV, for which it will pay AMD $371M in cash.
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AMD forecast current-quarter revenue to fall 10 percent, give or take 3 percent, sequentially.
