AMD announces layoffs in Silicon Valley

  By Lisa Amin

SAN JOSE, CA (KGO) -- The chip-maker, Advanced Micro Devices, announced hundreds of layoffs Monday. The tech-sector was one area that seemed resistant to the down economy, but it turns out Silicon Valley is not immune.

Advanced Micro Devices' white flag flaps in the wind, outside its Sunnyvale headquarters. A symbolic sign of surrender to the down economy, that's forcing company-wide cutbacks. A.M.D. blames the 16 hundred lay offs on a drop in fourth quarter, '07 revenue.

In a statement released Monday, AMD said "The decrease is due to lower than expected sales across all business segments. AMD announced plans to adjust its cost structure by reducing its workforce by approximately 10 percent by the end of the third quarter of 2008."

"Of course I'm worried, but I guess the company has to do it in order to survive and continue to be in the market," said an anonymous employee.

This employee who did not want to be identified, is a verification engineer. He doesn't think anyone, at any of AMD's world wide offices, is safe.

"There is a likelihood they could cut back dramatically here because most of the executives are not longer located here," said Rob Enderle from the Enderle Group.

Technology analyst, Rob Enderle says there is a possibility the Sunnyvale headquarters could close completely within a year.

"We're going into a recession and in a recession period, you're going to see staff reductions so over all we're going to see more of these," said Enderle.

Just last week, Google laid off 300 workers after acquiring a new company. The C.E.O warned more cuts could follow.

"The news about AMD and Google may mean growth is slowing across the whole world, so not just certain sectors here in the U.S. like real estate that are affected, but now we're seeing high tech firms. No one is immune," said Professor Michael Solt, Ph.D, from San Jose State University.

In the past, Silicon Valley's economic cycle hasn't always matched the national one. Meaning, you could find growth and stability here when you couldn't elsewhere. Solt doesn't see a Silicon Valley turn around, until later this fall.

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