AMD Channel Chief Says Layoffs Won't Impact Partners

AMD partners voiced concern Friday over news the chipmaker plans to reduce its workforce by 7 percent over the course of the rest of this year. Channel partners are worried the beleaguered chipmaker has already cut things too close to the bone in its all-out war against archrival Intel.

"Are AMD's best days already behind it?" said Todd Swank, senior director of product marketing at Minneapolis-based system builder Equus Computer Systems. "I hope not. It's been survival of the fittest among chipmakers lately. And AMD has been on the defense to Intel's offense."

Swank and other partners said that AMD's channel has withered as the company has struggled and lost significant market share to Intel whose x86 processors now represent 82.8 percent of chips shipped, according to a study by Mercury Research. That compares to AMD with 17 percent share

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AMD reported Thursday revenue down during its third quarter. Lisa Su, the company's newly appointed CEO said that same day it would lay off approximately 700 of the company's 10,150 employees, as it executes a restructuring plan to improve profits.

In an interview with CRN, Roy Taylor, corporate vice president and head of AMD's global channel sales, quashed any idea the channel or AMD's PC and GPU business would be impacted by the belt tightening.

"We support the channel, are committed to the channel and plan on investing more into the channel," Taylor said.

AMD's fighting spirit would not be diminished, Taylor said, in the wake of layoffs.

"We are listening to our partners," he said. "We know they want a CPU refresh to FX and a new chip architecture to compete with Haswell. We are aware of it and we are really focused on it."

AMD declined to share specific plans about the restructuring or what parts of its business will be impacted by layoffs. AMD's PC-related chip sales account for most of its revenue. But, as PC sales have lagged, AMD has shifted focus to growth areas of business such as ARM development, custom chips and GPUs for PlayStation 4 and Xbox One.

Equus, Swank said, has seen its CPU business go from 50 percent AMD to single-digit numbers today, as Intel becomes more competitively priced and offers a larger range of processors.

"They have laid off a lot of the people I used to work with on a daily basis," Swank said of AMD.

Tim Ulmen, principal at Midwest IT solutions group, a Wichita, Kan.-based system builder that counts AMD as its primary CPU partner over Intel said, AMD has been a rock solid partner for years. But with layoffs in the news, he is concerned AMD might take its eye off the PC game in a move it can't afford to do even for a moment under current market conditions.

"If they cut back on R&D and start slipping in CPU reliability, yes, I'm going to be worried," Ulmen said.

Taylor said, if AMD is guilty of anything it's not investing more on downstream second-tier partners.

"We are constantly talking to our Master Distributors," he said. "They have access to technical support, roadmaps and product availability. We care about all our partners. I invite any partner to contact me directly with their questions or concerns."

AMD runs the risk of spreading itself too thin as it tries to crack open new markets, partners said.

Marketing was the first casualty, partners said of the belt tightening at AMD that started nearly five years ago.

"I hope AMD isn't cutting it so close to the bone it's going to impact its PC roadmap and research and development," Ulmen said.

AMD partners said the chipmaker needs to bolster its team of field and sales representatives and put more marketing dollars into the channel to spark sales and excitement. That's an idea that partners will likely hear more about, Taylor said.

The challenge, he said, is breaking through Intel marketing noise.

"We are investing more in getting our message out there," Taylor said. "AMD makes world class products from FX to the Radeon GPU."

Taylor added AMD can't sit idly by as the Intel marketing machine steamrolls public opinion.

"Our challenge is both innovation, but also making sure customers and partners know AMD has really good products," he said.

AMD's commitment to the channel comes directly from AMD CEO Su, Taylor said. Earlier this month, when Su was appointed to the top spot, she said one of her priorities would be strengthening AMD's relationship with the channel.

"These are the ways AMD can build more strategic relationships and a stickier business," Su said.

Other partners were more pessimistic.

"I haven't seen an AMD sales a rep in five years. I don't see or hear anything from AMD -- no marketing, no sales calls, no field reps eager to tell me what AMD's roadmap is," said Glen Coffield, owner and president of Smart Guys Computers in Lake Mary, Fla.

AMD has positioned itself as the value alternative to Intel in the PC space, Coffield said. At that end of the spectrum, margins are razor thin.

"I can't sell a CPU over a $1.50 what I paid for it," Coffield said.

Part of the blame, he said, is AMD's reliance on distributors that have become primary sources for AMD chips. Distributors, Coffield said, didn't prioritize channel relations to the same degree as AMD once did.