WASHINGTON: Advanced Micro Devices Inc.’s third quarter results suffered from weak sales of chips for personal computers, but it disclosed a deal with a Chinese company that will provide a $371 million cash infusion and reduce future costs.
The chip maker on Thursday reported a $197 million loss in its third quarter on revenue that fell 26% from the year-earlier period. AMD recorded a $65 million write-down of some older chips in addition to a previously announced restructuring charge.
AMD, based in Sunnyvale, Calif., is the longtime underdog to Intel Corp. in sales of microprocessors that serve as calculating engines in PCs.
Chief Executive Lisa Su said PC makers hadn’t built as many systems using Microsoft Corp.’s new Windows 10 operating system as AMD had expected. “PC demand continues to be somewhat muted,” she said on a call with analysts.
AMD several years ago sold off the operations that fabricate its chips. But it retained facilities in China and Malaysia that package and test products it designs.
Under the deal disclosed on Thursday, Nantong Fujitsu Microelectronics will acquire an 85% stake in those operations and AMD will retain the remainder. About 1,700 AMD employees, roughly 18% of its workforce, will be transferred to the new joint venture.
AMD also said the deal will significantly cut its capital expenses. Ms. Su said the company plans to take other actions to bolster its balance sheet, including possibly licensing some of its patents.
“This portfolio is not broadly licensed and could provide a significant source of revenue for years to come,” she said.
Ms. Su also said Hewlett-Packard Co. has used AMD processors for a new line of notebook computers aimed at corporate customers.
AMD said revenue in its computing and graphics segment rose 12% from the second period but was off 46% from the year-earlier quarter.
Besides PC chips, AMD has broadened its business into customized chips that Sony Corp. and Microsoft use in their latest videogame consoles. Sales in the unit that includes those chips decreased 2% from the year-earlier period but increased 13% from its second quarter.
AMD’s quarterly loss, which came to 25 cents a share, compares to a profit in the year-earlier of $17 million, or 2 cents a share. Revenue declined to $1.06 billion from $1.43 billion.
Last month, AMD moved to lay off about 500 workers and outsource services as part of a broader realignment. Excluding $48 million in restructuring charges from that move and other items, AMD said its loss was 17 cents a share.
Analysts surveyed by Thomson Reuters had projected a 12-cent a share loss on $995.9 million in revenue.
For the current quarter, AMD said it expects revenue to decrease 10% from the third quarter compared with analyst estimates of an about 6% drop.
