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AMD Restructuring: What You Need To Know

AMD hasn't been having the greatest year. After drastic first and second quarter loses, a lackluster graphics card launch that didn't quite meet consumer expectations, and the recent departure of Jim Keller (one of AMD's most prominent microprocessor architects), many are assuming these are the first signs of the company's pending demise. However, AMD appears to be taking measures to correct its course, and it disclosed more of the company's restructuring plans that were announced back in July with its recent 8-k filing.

In an official statement to Tom's Hardware, AMD clarified the details of its restructuring goals, which included the development of several new key positions and teams. The Enterprise Solutions Team will be created within the company's enterprise, embedded and semi-custom segment to align business, engineering and sales efforts in the data center and embedded markets, a segment in which AMD sees huge potential for growth.

Two Regional President positions will be created in Europe and China to bolster operations in parts of the world critical to AMD's long-term success. The restructuring to-do list also includes aligning AMD's global real estate footprint with its business needs, so perhaps we will see an AMD home office in Beijing or London sometime in the future (though this is of course just speculation).

AMD is also streamlining its computing and graphics sales structure by focusing its teams on priority customers, markets and geographies. This includes the formation of the already-announced Radeon Technologies Group, which will be headed by Raja Koduri and is meant to bring a vertical focus to the graphics side of the business.

The part of the restructuring plan that has people upset is the section describing the goal of its IT model, which will be simplified by outsourcing AMD's IT support and internal application development. However, the end user experience will not be impacted by any of this, as these cuts are specifically targeted at AMD's internal IT support for employees, not its customers. End user drivers and programs will not be affected. The term "outsourcing" is a sensitive subject these days, but AMD's estimates of workforce reduction are not as damning as some have made it out to be.

The company estimated that as a result of these strategic decisions, approximately 5 percent of AMD's current workforce will be purged. With the company employing just about 10,000 people (and using the power of math), we deduce that these reductions will eliminate around 500 positions in the company. The cuts are expected to affect almost every division, but least of all its engineering and development teams, which are being properly invested in for future products.

The estimated cost of the restructuring and impairment charges tops $41 million, with AMD expecting savings of $9 million for the remainder of 2015 and $58 million in 2016. The restructuring will more than pay for itself in roughly a year's time, and by no means does it indicate the company is on some sort of funeral march.

If anything should be taken from this announcement, it's that AMD is focused on cutting costs and expanding enterprise solutions, not that the end is near. Although it's always unfortunate when people lose their jobs, a 5 percent cut in the workforce is a drop in the bucket compared to some other companies' restructuring plans, and it should be taken with a grain of salt. AMD is confident about its future. With Zen cores arriving next year and VR about to hit the mainstream, the company is simply positioning itself for the future, and we shouldn't be quick to judge a restructuring as a death knell.

Follow Derek Forrest @TheDerekForrest. Follow us @tomshardware, on Facebook and on Google+.

Derek Forrest
Derek Forrest is a Contributing Writer for Tom's Hardware US. He writes hardware news and reviews gaming desktops and laptops.
  • uglyduckling81
    I doubt 500 workers will be taking it with a grain of salt or if they care whether its a small or large amount compared to other companies.
    This might also be a move to increase share value for the inevitable sale.

    They really need a miracle to get their CPU's back to the forefront. That would revitalise the company. Their engineers seem to be quite lacking though so I don't expect a turn around for them.
    Reply
  • pug_s
    AMD put too much effort in making APU's but they didn't put any effort on making general CPU's without powerful GPU's. They could've make cheap 8 core cpu's or power powerful cpu's that could've competed with Intel I3/i5/i7
    Reply
  • FearfulSPARTAN
    I dont blame their engineers as much as how many they have employed is minuscule compared to Intel and Nvidia.
    Reply
  • MasterMace
    3 fab plants go up for sale with guarenteed business and the agreement includes getting paid to take them, and the fabless AND doesn't take it, the graphics launch flops, they ship out the jobs to India, and rip apart a standard structure of enthusiast-enterprise, embedded-graphics and completely flop that around after a long time of losses? Seems like the strategy has shifted from falling apart to swan diving into an empty pool. Next thing you know they'll be telling us the swim is great
    Reply
  • whassup
    AMD put too much effort in making APU's but they didn't put any effort on making general CPU's without powerful GPU's. They could've make cheap 8 core cpu's or power powerful cpu's that could've competed with Intel I3/i5/i7

    Making an APU with powerful GPU doesn't make sense without having HBM, eDRAM like technologies present. AMD's Kaveri's IGP were already bottlenecked by RAM bandwidth. Yes they could have made 6 or 8 core APU's though.
    Reply
  • dstarr3
    Who knows, Intel may bail them out before long. It's probably in their best interest that AMD survive, lest they go under and suddenly Intel is a monopoly.
    Reply
  • kenjitamura
    The next big blow to AMD will be when their Zen cores come out 3-4 months late at which time Intel will have already had Kaby Lake out the door and will be ~6 months away from releasing Cannonlake.

    It will be disastrous if Zen doesn't somehow outperform Kaby Lake in an aspect that attracts consumers because then it will see only moderate sales for that ~6 months which will drastically drop to abysmal levels when Cannonlake comes out and everyone's clamoring over 10 nm.

    AMD needs to do two things:
    1. Get Zen out on time.
    2. Make sure Zen is decisively more attractive than Intel's Sky lake and Kaby lake offerings.

    Honestly, I don't put too much faith in either of those happening.

    I'd love to be surprised though because Intel has had the exact same core/thread/pricing model since Sandy Bridge and it has never appealed to me. I don't want to have to pay $200 just for a true quad core or settle for a dual core with hyperthreading even if it is at an attractive $120 price point. Give me my dang $150 quad core >.<

    Intel's only real killer deal for a while has been its Xeon's with 4 cores and hyperthreading at $240 and even though that's extremely tempting I don't want to splurge on it.
    Reply
  • Tuishimi
    We are never going to see another new CPU out of them again, are we...
    Reply
  • knowom
    AMD put too much effort in making APU's but they didn't put any effort on making general CPU's without powerful GPU's. They could've make cheap 8 core cpu's or power powerful cpu's that could've competed with Intel I3/i5/i7

    Making an APU with powerful GPU doesn't make sense without having HBM, eDRAM like technologies present. AMD's Kaveri's IGP were already bottlenecked by RAM bandwidth. Yes they could have made 6 or 8 core APU's though.
    AMD put too much effort in making APU's but they didn't put any effort on making general CPU's without powerful GPU's. They could've make cheap 8 core cpu's or power powerful cpu's that could've competed with Intel I3/i5/i7

    Making an APU with powerful GPU doesn't make sense without having HBM, eDRAM like technologies present. AMD's Kaveri's IGP were already bottlenecked by RAM bandwidth. Yes they could have made 6 or 8 core APU's though.
    AMD's memory controller is also a bit on the weak side though compared to Intel/Nvidia both for CPU/GPU they just don't support fast enough modern memory standard speeds. That's part of their problem when everything is so memory bandwidth driven today.

    They also have failed to capitalize on multi-socket APU's entirely which could have had the potential to have been a major success. They'd have directly benefited from both APU and motherboard platform chipset sales.

    Really who the hell wouldn't go for a modular hyper-transport interconnect 2-4 socket APU board that could crossfire with each other to form bigger APU clusters that work together transparently? Forget buying a discrete GPU buy another APU and kill two birds with one stone.
    Reply
  • AS118
    Well, I hope they do better in the future. I don't want to see a world where Intel and Nvidia are monopolies. Sure they're making good products at reasonable prices NOW, but part of the reason for that is AMD (and ATi) competing with them in the past and right now in the present.

    If they both became monopolies who could collaborate, things could get really dicey for us PC consumers, and also for console players. I feel like people forget that the newest consoles are so cheap and powerful (well, for consoles) because of AMD. Microsoft and Sony should be grateful to AMD. Nintendo should be too, especially if their next console is a full AMD APU as opposed to PowerPC + an AMD GPU.
    Reply