Rory Read, the former IBM (NYSE: IBM) and Lenovo executive hired to turn around chip maker Advanced Micro Devices (NYSE: AMD) in August, is making his first move.
It will cost 1,400 AMD workers their jobs with the cuts spread across the company.
Read, who was Lenovo’s No. 2 executive and the most senior former IBM worker left at the PC maker after Lenovo bought it in 2005, announced the cuts in a statement issued on Thursday.
The CEO of the second-largest maker of computer processors said AMD would eliminate 12 percent of its workforce in a bid to cut costs and shift its products into faster-growing markets.
The reduction will occur across all levels of the company and carry $105 million in restructuring expenses, mostly in the fourth quarter.
The layoffs will unfold over the next five months.
AMD is struggling with an industry-wide problem: PC sales growth, particularly in the U.S. and Europe, has been anemic because of the weak economy and competition from smartphones and tablets.
Although PC shipments continue to grow, the pace is slowing sharply — and more than market research firms IDC and Gartner Inc. expected. That has raised concerns about the strength of the market going into the holiday shopping season.
AMD had 12,019 employees as of Oct. 1.
Read is looking for ways to boost profitability as AMD transforms into a chip-design business. The company spun off its manufacturing operations in 2009. AMD also reduced its workforce that year, shedding 1,100 jobs.
AMD expects to save more than $200 million in operational expenses in 2012. The company plans to use the money to invest in lower-power chip designs and processors that are suited to the rapidly growing data-center market. AMD also will improve its ability to sell chips in emerging areas.
In his first earnings conference call with analysts last week, Read said customers told him AMD needs to work on its execution. The company is a distant No. 2 to Intel Corp. (Nasdaq: INTC), which controls more than 80 percent of the market for personal- computer processors.
AMD shed its manufacturing arm through a joint venture with the government of Abu Dhabi, which led to the formation of Globalfoundries Inc., a company that still handles most of AMD’s manufacturing. While the arrangement has helped restore profitability at AMD, manufacturing slip-ups have hurt growth. AMD’s third-quarter sales missed its initial projections after Globalfoundries couldn’t supply enough of AMD’s new laptop chips to meet demand.
(The AP and Bloomberg contributed to this report.)
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