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AMD: When Channel Demand Outruns Supply

AMD has had trouble keeping supply in the channel for more than a year now, and this quarter it’s going to affect the bottom line. The No. 2 chip maker warned Wall Street early March 5 that the company would likely miss its first-quarter revenue forecast due to shrinking profits. Hector Ruiz, AMD’s CEO, later […]

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John Hazard

Mar 6, 2007

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AMD has had trouble keeping supply in the channel for more than a year now, and this quarter it’s going to affect the bottom line.

The No. 2 chip maker warned Wall Street early March 5 that the company would likely miss its first-quarter revenue forecast due to shrinking profits. Hector Ruiz, AMD’s CEO, later acknowledged at the Morgan Stanley Technology Conference in San Francisco that the company is struggling with channel growing pains as it tries to balance its traditional system-builder channel and newfound demand from OEMs, which now sell about half of units shipped.

Demand from OEMs slipped with the downturn in the PC market (down 18 percent at Dell alone) this quarter and the company failed to switch supply back to its system-builder channel in time to meet demand there and save profits, according to a report on the topic by Technology Business Research.

AMD is grappling with its “inability to shift sales from PC makers to the reseller channel quickly to compensate,” said TBR researchers.

“We believe that AMD may have been counting on more desktop business from the PC makers or possibly more of a bump from Windows Vista PC sales during the early part of the first quarter,” TBR said.

AMD: When Channel Demand Outruns Supply

John Hazard

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