After reporting another staggering fourth-quarter loss of $1.424 billion on sales of $1.162 billion yesterday, AMD announced a plan to prevent excess inventory. AMD executives said they will let existing inventories in the reseller channel deplete, and they added AMD will make fewer processors than its customers demand, so as to not be stuck with excess inventory.
AMD is going to slow everything down quite a bit, and this implicates people looking to buy AMD processors in the next few months may have trouble to find one because supply will be lower than demand.
Neither Rivet nor AMD's president and chief executive Dirk Meyer indicated whether or not such manufacturing cutbacks would be across the board, or just in particular segments. Meyer alluded to a "severe industry correction in the IT supply chain, especially in notebooks," and both executives indicated that supply and demand were out of whack in the notebook segment.
Meyer, however, did confirm that AMD would deliberately not meet demand. "I was just going to put a point on that by saying you know, we think our CPU sales out of AMD will be less than consumption… our inventories will drain in Q1 – we'll clearly be manufacturing below our shipment level," he said.