The new business will leverage the capabilities of 5 facilities and approximately 5,800 employees to offer differentiated ATMP capabilities and scale to service a broad range of customers. “There will be no job cut at AMD’s Penang or Suzhou facilities and approximately 1,700 employees will be moving to the joint venture,” said AMD.
As consideration for the transaction, AMD expects to receive $371 million from NFME, cash of $320 million, net of expenses, and retain 15 percent stake in its Penang and Suzhou operations. AMD aims to cut capital expenditures with the transaction.
“We continue our transformation by creating a joint venture combining AMD’s ATMP facilities and our experienced workforce with NFME’s expertise in outsourced semiconductor assembly and testing,” said AMD Senior Vice President, Chief Financial Officer and Treasurer Devinder Kumar.
The joint venture will benefit from increasing demand for semiconductor assembly and test services (SATS). Gartner says the SATS market revenue is expected to be $27.4 billion for 2015, with growth of 1.1 percent. The 2014 through 2019 CAGR for the market is forecast to be 4.6 percent, leading to approximately $34 billion in total estimated market revenue by 2019.
AMD slips further
Meanwhile, AMD said its revenue dipped 26 percent to $1.06 billion in the third quarter of 2015 from $1.43 billion — primarily due to decreased sales in the Computing and Graphics segment. AMD posted net loss of $197 million against a net profit of $17 million.
Lisa Su, president and CEO of AMD, said: “We continue to take targeted actions to improve long-term financial performance, build great products and simplify our business model. The formation of a joint venture of our back-end manufacturing assets is a significant step towards achieving these goals.”
How AMD flopped
Computing and Graphics segment revenue fell 46 percent from Q3 2014 — driven primarily by lower client processor sales.
Client processor average selling price (ASP) decreased primarily driven by lower notebook processor ASP.
GPU ASP increased due to new GPU product offerings and improved AIB ASP.
Enterprise, Embedded and Semi-Custom segment revenue dipped 2 percent due to lower embedded product and server processor sales.
AMD expects revenue to decrease 10 percent sequentially in Q4 2015.