AMD jobs warning as losses loom

Chip manufacturer AMD has revealed it will shed 300 jobs after it warned investors for the second time in a month to expect a 'significant' loss in the first quarter, ending 28 March.

The warning resurfaces as AMD's latest K6-III chips continue to be in short supply throughout Europe, following an unspecified problem in the manufacturing of the microprocessors. The 300 jobs are expected to be phased out during the next two quarters, although no details have been released regarding where the losses will come from.

AMD had originally planned to ship 5.5 million K6 chips this quarter, but following a redesign of the processor to raise total manufacturing yields and increase the number of high-speed chips, the shipment is now expected to be less than five million. The yield problem has now been rectified, although the vendor is still likely to fall short of its target by nearly six million parts.

The announcement saw AMD's shares fall 7.6 per cent to $17.50 by the end of play on 9 March. The chip vendor lost money consistently between 1997 and 1998 and has since then fallen short of analysts' expectations.

Stiff competition from Intel's low-end Celeron chip has also been partly to blame for the poor showing from the processor vendor.

There was also speculation that Intel would be forced to take similar steps, as Wall Street analysts are expecting that its first-quarter expectations will also fall short of analyst expectations. The speculation sent Intel's shares tumbling $4.31 down to $115.31.