AMD Says On Track To Return To Profit In 2Q

Advanced Micro Devices Inc.

The company has said repeatedly in recent months it expected to return to profitability in the second quarter after last year's deep info-tech slump sent AMD and many other chip makers into the red.

"The market last year declined 32 percent, the worst year in the history of the semiconductor industry. We were fortunate that our sales were down only 16 percent," Ruiz told a news conference.

"Going into 2002, there's a lot of uncertainty. Most of the estimates from analysts range from no growth to single-digit growth. We expect to outperform the market."

But Ruiz said it was hard to gauge how the market was performing only six weeks into the new year, although there was nothing so far that would prompt a change to the company's earnings outlook.

AMD expects capital spending to be flat at best in 2002 compared with the previous year, although no specific target has been set, he said.

Rival microprocessor maker Intel Corp., the world's biggest chipmaker, has said it would cut its capital spending this year after hefty investments last year.

Ruiz said the market for flash memory chips, used extensively in cellphones, communications equipment and consumer electronics, would pick up later this year after slack demand last year triggered a supply surplus and steep price declines.

"We see wireless to start recovering in the second half of this year and networking communications to begin recovering toward the end of this year," he said.

"We expect significant growth to resume in 2003 and beyond."

AMD, the world's second-largest flash memory chip producer, has a joint venture with Fujitsu Ltd, the world's third-largest flash memory maker. Intel is the largest.

Ruiz said AMD and Fujitsu were unlikely to shift flash memory chip production to 300 mm wafers this year or next.

"Both of us have adequate capacity for the next year or two," he said.

The semiconductor industry is beginning to shift to dinner plate-sized 300 mm wafers, which Ruiz said could generate cost savings of 30 percent or more compared with the currently standard 200 mm variety.

AMD's shares ended Tuesday trade up 0.8 percent at $15.12. They have rebounded slightly after hitting a two-month low of $13.47 earlier this month.

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