AMD Cuts Q3 Guidance On 'Manufacturing Issues'

The company forecast its third quarter revenue to be 4 to 6 percent higher than the second quarter this year. Previously, AMD's Q3 guidance was 10 percent revenue growth, plus or minus 2 percent. The chip maker also reduced its gross margins for the quarter from 47 percent to 44-45 percent.

AMD said lower-than-expected preliminary results "are primarily due to 32-nm yield, ramp and manufacturing issues at GlobalFoundries in its Dresden, Germany factory that limited supply of Llano." AMD launched its A-Series Fusion APUs (accelerated processing units), codenamed "Llano," in June. The A-Series chips for desktops and notebooks were viewed as a crucial part of AMD's Fusion strategy, which combines AMD's CPUs with the Radeon GPU technology the company acquired through its purchase of ATI in 2006.

In addition to manufacturing issues with Llano, AMD also said its supply of 45-nm microprocessors was less than expected due to "complexities related to the use of common tools across both technology nodes." AMD also said shipments of its next-generation server processor, code-named "Interlagos," occurred later in the third quarter than the company had anticipated.

AMD said it will continue to work closely with GlobalFoundries to improve 32-nm yield and satisfy demand for its new Fusion chips. AMD spun off its manufacturing business in 2009 as GlobalFoundries in to focus solely on semiconductor development and design.

Prior to launching Llano, AMD amended its manufacturing agreement with GlobalFoundries in order to bolster production of its 32-nm chips. However, Thursday's announcement shows that AMD's revised agreement with its former fabrication plants did not produce the desired results.