Advanced Micro Devices, Inc

Advanced sm entirely Devices, Inc. is ranked as the as the worlds second largest PC chipmaker with a securities industry take of just 17%, far behind Intel Corp. with 81% of the commercialise (Buckman and Williams two hundred1, 1). However, in 2000 AMDs gross revenue jumped 63% to $4.6 billion, producing $983 million in net income and its origin profit sufficient year since 1995 (Streetwalker 2001, 1).AMD owns engineering, manufacturing, warehousing and administrative facilities where it produces non only PC chips precisely overly microprocessors, memory circuits, logic circuits, flash memory devices, telecom products and embedded processors (Moodys 2000, 2520). The high societys home and research and growth site are dictated in Sunnyvale, CA, opus the wafer manufacturing plants are located in Austin, TX and Dresden, Germ any(prenominal). The block a mode and assembly facilities are located in capital of Thailand, Thailand and Penang, Malaysia. The come with has al so established takings at the Singapores test and assembly facility as well as an analysis and construct plant in Suzhou, China. In addition, a new plant in Japan, a peg venture of AMD and Fujitsu, c solelyed AMD Fujitsu Semiconductor Ltd. or FASB, will range operations in the premiere half of 2001 (Dum 2000, 2).AMD, like many proficient multinational enterprises (MNE), prefers to locate its factories and assembly plants in technology clusters in abiding and democratic countries. However, AMD knows that East Asia is unmatch open of the best places for setting up factories because of dirt cheap wages, stable countries, proximity to suppliers and potentially large markets. In fact, six out of AMDs nine facilities are located in East Asia and implement approximately 5,600 people.The confederations consolidated world(prenominal) position produces a actually interesting case. This paper will analyze AMDs internationalist operations, competitors, alliances, legal problems, and its relationship with stakeholders. In addition, the recent meltdown in hi-tech stocks and the reduction of PC gross sales are provoking the semiconductor intentness to diversify its business. This analysis will consider the consequences of this problem and the resulting variegates in AMDs corporate business strategies.The personal computer microprocessor market is considered a quasi-monopolistic market in which the largest corporate buyers such as Dell figurer Corp., Compaq Computer Corp., Hewlett Packard Co. and IBM Corp buy almost solely from Intel Corp. (Mathew 2001, 1). For this reason, AMD has had difficulty introducing its microprocessors into the market. For example, in January 1994, AMD and Compaq Computers Corp. organize an alliance in which AMD Am486 microprocessors would power Compaq computers (AMD 2001, 2).Between 1994 and 2001 AMD was not able to allure another large PC vendor to buy its microprocessors. However, in January 2001 AMD got its first contract wi th a major PC vendor, Micron Electronics Inc., to give the Athlon microprocessor for the Micro Electronics ClientPro product line (Konicki 2001, 2). In the same month, AMD also contracted to generate and introduce its first version of the Duron microprocessor for laptops to NEC Corp., Japan (Duron chips for laptops 2001, 1)In addition, while Intel launched the Pentium IV at the end of 2000, AMD took advantage of the transition from Pentium III to IV to try to convince several of the largest corporate buyers, which were comparing the new Intels Pentium IV and AMDs Athlon, to switch to AMDs Athlon microprocessors. Although AMD could not change any of the corporate buyers minds, the company did prove that the Athlon microprocessor is faster, more(prenominal) reliable and cheaper than Intels Pentium IV (Letters 2001, 3).This failure was frustrating for AMD, but this is the price a unbendable has to ease up when attempting to enter a competitors market. Clearly, Intel has the first- in advantage, although AMD has a better note portfolio with a cheaper price. However, so mavinr or later this trend moldiness change because Intels marketing cannot hide this reality. Some laboratories have tested both AMD Athlon and Intel Pentium IV and have concluded that while Intels Pentium IV is not worth what it costs, AMDs Athlon costs what it is worth. Thus, AMD does not have to attract customers by resorting to rebates and discount programs, as Intel has to do. Another weapon Intel has is to cut processor prices.In any case, Intel does not want to lose any market shell out, and AMD wants to stomach more, so the rivalry and price war will certainly bear this year. They both know that in competitive markets, a market character lost by one company is a market share gained by the competitor. As a result, both companies are preparing to compete with one another. In fact, both AMD and Intel have increased their capital spending for 2001 by or so 20% to $1 billion and $7.5 b illion respectively, although PC sales growth is expected to slip to 16.6% worldwide, down from 18.8% in 2000 (Hannon 2001, 1).AMD realized that it must diversify in order to chief(prenominal)tain its growth rate. TheAMD and Fujitsu Ltd. venture, FASB, which includes voice proficient development and production of flash memory for cellular handsets, is one way to diversify. Together AMD and Fujitsu have 30% market share of the flash memories interchange for cell phones. However, in the short-term FASB will not be able to supply enough flash cards to get a larger percentage of the handset market because of capacity limitations. Therefore, in the year 2000 Fujitsu converted several of its own plants to serve strictly as factories for the joint venture. FASB is also pushing as hard as it can to suffer production in its new mega plant in Japan, if possible before June 2001. The main competitor in this market is again Intel, which has active 60% of the market share, so another pric e war may soon light (Dum 2000, 2).Customers neither want to depend on only one supplier nor to contribute to Intel market dominance. They want to reduce the risk of insufficient supply of chips that occurred remainder year. Siemens is now buying flash-memory chips from both FASB and Intel (Accord is set 2001, 1). likewise Siemens, Sun Microsystems Inc. also decided to buy microprocessors from both AMD and Intel for its Cobalt boniface (Robertson 2001, 3).In this market war neither AMD nor Intel have ever been very interested in making collaborating. However, AMD has developed other collaborations with many associate companies In 1987 AMD and Monolithic Memories Inc. agreed to merge. As mentioned earlier, in 1993 AMD started a joint venture with Fujitsu Ltd., Japan. AMD collaborated with LSI Logic Corp. and Texas Instruments Inc. to create integrated solutions for digital base good deal processors (Dum 2000, 2). AMD, Dupont Inc., Motorola and Micron Technology Inc. are involve d in a joint venture in Texas in which they research and develop photomask technology for time to come generation semiconductors (Chappell 2000, 1). On February 14, 2001 AMD, stated that it will license technology to about ampere-second companies including Cisco Systems Inc., Nvidia Corp. and Fujitsu Ltd. The licenses do not charge a immediate payment fee, but they swap intellectual property (New AMD system 2001, 1). AMD and Motorola have a strategic alliance to research the copper interconnect technology field. At present, AMD is looking for a partner to build in 2004 its first 300-mm pulverisation costing about $4 billion (Advanced Micro is seeking 2001, 1).The prevalent warfare between AMD and Intel never seems to change, but analysts expect both firmlys to begin to collaborate soon. The small semiconductor players are now creating partnerships to reform their positions in the market. In fact, the microprocessor industry accounts for a lot of distinct technologies that no one company can have in-house (Dum 2000, 3)In the last ass of 2000, sales of Duron, AMDs low-cost processor, were not as strong because a chipset employ with the microprocessor was not readily available. Therefore, AMD decided to plan for the future and began a two-year multimillion-dollar global SAP roll to provide a just-in-time (JIT) inventory program. In addition, SAP tools such as financial, supply kitchen range, production, logistics and e-business software, would give AMD and its suppliers and customers day to day breeding regarding the chipmakers production and supply chain. This project would benefit all three parties (AMD, suppliers and customers) by avoiding upturns and downturns in demand and supply (Konicki 2001, 2).As a technological sector firm, AMD is also deeply involved with the latest technology. For example, the companys internal website provides employees plenty of information not only for nurture purposes but also for safety purposes, such as radiation c urtail, chemic issues, hazardous energy control and waste management issues. In from each one of the companys local sites, the firm uses the latest technology in both the production area and in the corporate offices.Although in 1976 AMD and Intel sign-language(a) a patent cross-license agreement, in the late 80s AMD initiated several arbitration effects against Intel (AMD 2001, 1). The reasons for these arbitrations were Intels quasi-monopolistic dominance of the microprocessor market and its unfair market behavior, as fact support by many other companies. The most tedious arbitration action finished in February 1994 after five historic period of motor inn disputes. The prove finally ruled against Intel and awarded AMD full rights to produce and sell the entire Am386 family of microprocessors (AMD 2001, 2). excessively another court case against Intel in 1994, AMD has never been in court again. Nevertheless, AMD continues to complain about Intels market behavior. For exampl e, Intel pressured IBM to backtrack a notebook computer microprocessor order that IBM had already booked with AMD (Mathew 2001, 2). As a result, AMD lost the contract.The Environmental, Health, and condom (EHS) program provides a safe work place for employees, protects the environment, prevents damage to property, enhances employee morale and assures compliance with applicable laws and regulations worldwide. The program is disseminated from the main team to all AMDs local sites. Then, local sites apply this information and provide different run to the stakeholders surrounding each site (AMD 1999, 1).Another task of the EHS department is to gravel the (ISO) 14001 enfranchisement from the International Organization for Standardization. By the end of 1999, AMDs Bangkok facility had already been certified. All other AMD manufacturing facilities are expecting to strike this certification before the end of 2001. The (ISO) 14001 certification develops standard methodology to recogniz e, identify, evaluate and control hazards in the workplace. The emphasis of this effort is intended to internalize those standards throughout the firm because they have not existed in the past. These standards are one way to improve the moral and physical well being of the work embrace.The safety and health indemnity focuses on reducing occupational injury and illness rates company-wide. To achieve this goal, each local facility must establish Engineering controls and tests such as leak detection, air supervise and fire detection systems. urgency preparedness plans to learn what to do in case of fire, hazardous hooey release, earthquake and other natural disasters. . Education empowerment at all personnel levels through the internal website and seminars.Moreover, AMD offers additional services in different sites such as The Employee Development Center (EDC) in Bangkok, Thailand and Penang, China which has practise rooms, fitness programs and relaxation rooms. The Repetitive Moti on Injury (RMI) in Sunnyvale, CA specializes in adjusting the furniture and equipment to the needs of each individual at his or her workstation (AMD 1999, 17).The safety and health policy has had excellent results considering that in recent years less than three injury and illness cases out of every 100 employees have been reported.In the globalisation era, AMD has to adapt to different cultural environments and integrate different cultures in the organization. AMD operates in four continents, so its work force is a smorgasbord of people, cultures and customs. One can find an American workings in a Singapore assembly plant or a Bolivian working in a factory in Dresden, Germany. This sort creates an atmosphere of synergy and creativity that encourages every employee to do his or her best.The mix of cultures also facilitates the international communication between AMDs messs, suppliers and customers. Under the universal joint employment policy and procedures that govern AMDs pr actices worldwide, discrimination is not welcomed. byplay applicants do not need to be concerned about age, color, ancestry, disability, religion, gender, sexual orientation, marital status or national origin (AMD 1999, 1). AMD also cares about employee morale and respect for individuals as well as individuals values.The environmental policy is an important part of AMDs EHS program performance. The firm focuses on multimedia pollution prevention and resource conservation. In the last couple of years the firm has not only reduced the quantity of hazardous waste generation, electricity use and water consumption but also has enhanced a successful reuse and recycle program. To illustrate, in 1999, at the Dresden factory, its own energy center was able to generate more than 100% of the power the factory consumed. At the same time, the Dresden water recycling plant recycled 20% of the consumed water (AMD 1999, 10).Because of these and many other environmental accomplishments, AMDs loca l sites have standard several awards. The state of California has awarded AMD headquarters for its commitment to solid waste reduction and recycling programs for five serial years. The city of Austin, TX awarded AMD for its excellent compliance with wastewater treatment regulations.AMDs globalization emphasis has made it possible to begin building supply chain environmental management. To accomplish this project, the AMD EHS department evaluates the worldwide chemical suppliers EHS program and collects this information to select and evaluate existing suppliers.As AMD evaluates its suppliers, third-party firms also evaluate and audited account AMD local sites. Six of the firms local sites that have been inspected, usually by local government environmental agencies, have not current any citations or violations. However, AMD headquarters has been inspected 13 times between 1996 and 1999. This location has received five citations related to labeling of hazardous waste. Two other sit es that were inspected and received citations were the Suzhou assembly plant because of two releases of diesel fuel and the Dresden plant because of a phosphoric acid release (AMD 1999, 9-18). AMD resolved all issues to the satisfaction of the regulatory agencies without any fines.AMD has been committed to the communities in which it operates. The firm has also been a responsible for(p) and good neighbor that has involved the local communities in its corporate piece programs. Some of the most important contributions done in 1999 directly by the AMD headquarters were first, a cash gift of one percent of pretax profits to nonprofit agencies and schools that serve the communities where AMD operates and second, $1 million to the Taiwanese government because of the family 21st earthquake. On the other hand, each site contributes to its own familiarity in different ways.For example, in 1999 AMDs Bangkok site donated 200 computers to the community and cash to the Red Cross of Thailand to support a project that helps mothers with the AIDS virus. AMD Sunnyvale donated $600,000 to organizations and schools in the Sunnyvale area. In addition to financial donations, AMDs custody also participates in volunteer opportunities. Some examples are AMDs Penang employees line of work donations to the Blood Bank Hospital of Penang and AMDs Dresden EHS personnel factory tours and the monitoring of ecological projects with local schools (AMD 1999, 10-18).This analysis has attempted to prove that AMD has an efficient weapon to run a global business. The firm not only was able to become a profitable company in the fourth quarter of 2000 but also proved that it can gain more market share from all the markets in which it does business. Moreover, AMD has been a good neighbor to the communities in which it functions, satisfying many stakeholders desires. AMDs positive overall performance assures the company a bright path for future growth in the global economy.