Departure of AMD executives points to strategy shift

AMD looks to focus more on efficiencies in manufacturing and distribution of chips

Advanced Micro Devices on Wednesday announced a flurry of moves, including the departure of two senior executives, which analysts said was part of an internal cleanup effort as the company searches for a new CEO.

The company announced that Bob Rivet, executive vice president and chief operations and administrative officer, and Marty Seyer, senior vice president of corporate strategy, have left the company. AMD also said John Docherty, senior vice president of manufacturing operations, will report directly to interim CEO Thomas Seifert.

The departures come less than a month after Dirk Meyer resigned as CEO in mutual agreement with the board of directors. While it looks for a permanent CEO, the company has appointed Seifert, the company's chief financial officer.

The departure of key executives may represent a shift in AMD's business strategy as it tries to get up to speed with rival Intel, and also prepares the company for a new CEO, said Nathan Brookwood, principal analyst at Insight 64.

"They probably are making some changes in anticipation of having a new CEO," and to "rationalize and restructure the organization a bit," Brookwood said.

There were complaints of AMD being slightly bureaucratic, so the personnel shift may be an effort to make the company more responsive, Brookwood said.

The move to get manufacturing executive Docherty to report directly to the CEO indicates that AMD intends to make handling of manufacturing a top priority as it ties up loose ends since becoming a fabless company, said Dean McCarron, principal analyst at Mercury Research. AMD divested its manufacturing unit in 2009 to a separate company called GlobalFoundries, in which it holds a minority stake.

"If you look at AMD historically, the place where they've had troubles is [transitioning] from design to manufacturing phase," McCarron said.

AMD spokesman Drew Prairie said that the company continues to retain a strategic relationship with GlobalFoundries to make PC chips. However, AMD is also using Taiwan Semiconductor Manufacturing Co. (TSMC) to make the latest Fusion chips, which combine a CPU and graphics processor on a single chip.

AMD feels it needs to improve the consistency of execution in manufacturing, which is especially important to help it better compete with Intel, which owns its factories and is known for clockwork execution, McCarron said.

Souping up the manufacturing involves dealing not only with design, but also packaging and distribution of chips, analysts said. AMD also needs to beef up its supply chain operations, which is also a strength for Intel.

Beyond manufacturing, further restructuring may be in store as AMD looks to boost its server and mobile operations, McCarron said. AMD lost processor market share to Intel in the server and mobile PC space last year, despite adding customers. During the third quarter last year, Intel had an 80.4 percent market share of microprocessors shipped, while AMD had a 19.2 percent market share.

The company offers strong chips for laptops and netbooks but has been slow in planning for the tablet market, which is growing at a fast rate. AMD has held back plans to release its first tablet chips in 2012.

There are questions on whether x86 processors from Intel and AMD have a role to play in the tablet market, but AMD's future plans may include quickly addressing the tablet market.

"The bus hasn't left the station on that one," which points back to AMD's plans to put more focus on the mobile market, McCarron said.

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Agam Shah

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