AMD Faces 32nm Challenge; Cuts Q3 Revenue Forecast

AMD reduced its revenue growth expectations for the third quarter by about 50 percent, stating that it has been affected by "manufacturing issues" at Globalfoundries.

The company said that it expects its revenue to climb by about 4 to 6 percent in the third quarter, which is down from a previous 10 percent sequential growth estimate. There is nothing wrong with demand; rather, it was manufacturing issues at Globalfoundries that impacted the yield of 32 nm Llano processors that are blamed for the revenue downfall.

The company also noted that 45 nm supply of Llano processors was less than expected, due to "complexities related to the use of common tools across both technology nodes." As a result, the shortage put AMD's average selling prices and margin under pressure.

In addition, AMD's 16-core Interlagos (Opteron 6200) server processor began shipping later than planned. Investors reacted almost immediately and sent AMD's stock down more 15 percent to $5.20. AMD's market capitalization dropped to just $3.59 billion.