AMD Predicts Rosy 2004, May Start Hiring

Number-two microprocessor maker AMD has said it sees signs of improving market conditions and will start “selectively hiring” during 2004 to meet an anticipated increase in demand.

The company said it expects to post a profit in the fourth quarter and is optimistic about at least the first half of 2004, thanks to what executives called a “mini-boomlet” in the market for personal computers.

“There is definitely a perceived recovery here,” CEO Hector Ruiz said during the company’s annual analyst meeting. “The worst is behind us. It’s clear things are coming back.”

AMD will move quickly to respond to the new demand, Ruiz said, and has most of the puzzle pieces in place already. “There will be some modest hiring, but it will be selective,” he noted. “We will be hiring some people, but we’re going to be judicious. We have a model, a plan to stay profitable, and we’re trying to follow it closely.”

Close to the Vest

The Sunnyvale, California-based chipmaker also underscored its confidence in long-term market trends by saying it will invest in a next-generation plant that uses the 300-millimeter chip fabrication standard.

The company did not disclose the location of that plant, a timeframe for its opening or whether it will build the facility on its own or work with an industry partner. AMD previously had intended to build a plant with Fujitsu but scrapped that project, citing a lack of progress.

Dwindling Inventories

IDC semiconductor analyst Shane Rau said the “boomlet” to which AMD referred is likely the final drawing-down of inventory by PC makers and others. With notebook sales remaining strong and several computer makers dropping prices heading into the holiday season, most PC makers are eager to ramp up production heading into 2004.

“The chipmakers benefit from the PC makers seeing a chance for a real spike in demand,” Rau said. “Consumers are already buying, and if enterprises start to replace machines in large numbers, [PC makers] want to be able to produce them at least as fast as they can sell them.”

Opening Act

AMD’s analyst meeting came just a day after the Semiconductor Industry Association laid out its forecast for the overall industry, saying growth of more than 15 percent in 2003 will be followed by a nearly 20 percent market expansion during 2004.

The SIA said it expects to see growth “across all industries,” helping the industry reach a total value of more than $194 billion by the end of next year.

Other tech companies also have highlighted recent market acceleration when reporting their earnings, most notably Cisco, which saw revenue top the $5 billion level for the first time in nearly three years. Last month, chip giant Intel beat Wall Street forecasts as well, citing across-the-board sales growth, and IBM said in its most recent earnings report that it could add as many as 10,000 jobs worldwide in 2004.

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