AMD to cut 1,100 global jobs

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Advanced Micro Devices announced new job cuts Friday, and also a Feb. 10 date for a shareholder vote on creating the spinoff company expected to build a $4.6 billion computer chip fabrication plant in Luther Forest.

AMD said it will be eliminating 1,100 jobs, nine percent of its global staff, and taking other cost-cutting measures in response to the slowdown in sales of personal computers. About 900 cuts will involve layoffs, with other reductions by attrition and sale of a small business unit.

None of the 3,000 workers moving from AMD to the new company, being temporarily called The Foundry Co., will lose their jobs, company officials said.

“Our previously stated plans regarding the new fab in New York remain unchanged. We still expect to close the deal and launch the new company early this year and break ground on the new fab in 2009,” said Travis Bullard, a spokesman.

The Feb. 10 shareholder vote at the Hilton Austin Airport Hotel in Austin, Texas, should be the last major step in creating The Foundry Co.

Announced in October and subject to regulatory reviews and shareholder approval, the plan will have two technology investment funds controlled by the government of Abu Dhabi, which is investing $7 billion, in return for a 20 percent share in AMD and nearly two-thirds ownership of The Foundry Co.

The Foundry Co. will take over AMD’s current manufacturing plants, including the planned Luther Forest Technology Campus project, and will be free to sell chips to other customers, as well as AMD. AMD is expected to be the main customer, though.

Information on the shareholder meeting was filed Friday with the Securities and Exchange Commission.

Scheduling of the shareholder vote has been awaiting completion of regulatory reviews. Those include New York’s transfer late last year of a $1.2 billion incentive package from AMD to the new venture, and a federal government approval of the foreign investment that was granted on Jan. 6.

The plan still needs approval from the European Union, because the transaction will affect two chip fabs in Dresden, Germany.

“We do not have the EU confirmation yet but we expect to receive it shortly,” Bullard said. “Once the shareholder approval vote takes place then the deal will be signed by all parties and we’ll officially launch the new company, brand name, logo, etc.”

AMD has struggled financially for more than a year, between its fierce competition with industry leader Intel Corp. and the economic downturn, and had layoffs last year. It has about 14,000 employees, not accounting for the spinoff.

In addition to the new round of worldwide job eliminations during the first quarter, Bullard said other cost-cutting measures AMD and The Foundry Co. are taking include temporary 20 percent cuts in base pay for top executives Dirk Meyer and Hector Ruiz, and temporary pay reductions for other managers and employees as well. Company contributions to 401-K retirement plans are also suspended.

“These actions, while difficult, will allow AMD to better navigate the turbulent economic conditions while protecting our core capability to execute our technology roadmaps and position AMD for long-term success,” Bullard said in a statement.

AMD closed on the New York Stock Exchange Friday at $2.29 a share, up 3 cents for the day.

Meanwhile, land subdivisions needed at the Luther Forest Technology Campus before the chip fab moves forward are under review by planning boards in both Malta and Stillwater.

The Malta Planning Board will hear the subdivision request Tuesday night, while the Stillwater Planning Board heard it this past Monday, but postponed action until its next meeting.

Company officials have said they want to begin clearing land in March, and start construction on the factory in early summer.

The Foundry Co. will be buying about 220 acres, with 163 acres in Malta and about 57 acres in Stillwater. It will pay $35,000 per acre, according to county records, or about $7.7 million.

The technology campus includes 1,380 acres, more than half of which is required to remain green space. After the sale, Luther Forest will still have about 400 developable acres, said Michael Relyea, president of the Luther Forest Technology Campus Economic Development Corp.

Malta Planning Director Anthony Tozzi said the town also expects a site plan approval application from The Foundry Co. soon.