AMD is suffering from poor Llano yields

AMD send out a profit warning to investors, stating it won't be able to achieve the previously forecasted 8-12 percent rise in quarterly revenue due to Llano manufacturing issues at GlobalFoundries. Third quarter revenue is anticipated to increase four to six percent compared to the second quarter, and the company also reveals that its Interlagos server processor shipped later than originally anticipated.

AMD (NYSE: AMD) today announced that revenue for the third quarter ending Oct. 1, 2011 is expected to increase four to six percent as compared to the second quarter of 2011. The company previously forecasted third quarter 2011 revenue to increase 10 percent, plus or minus two percent, from the second quarter of 2011.

In addition, AMD expects third quarter gross margin to be approximately 44 to 45 percent. The company previously forecasted third quarter 2011 gross margin to be approximately 47 percent.

The less-than-forecasted preliminary third quarter 2011 revenue results are primarily due to 32 nanometer (nm) yield, ramp and manufacturing issues at GLOBALFOUNDRIES in its Dresden, Germany factory that limited supply of "Llano". Additionally, 45nm supply was less than expected due to complexities related to the use of common tools across both technology nodes. AMD continues to work closely with its key partner GLOBALFOUNDRIES to improve 32nm yield performance in order to satisfy strong demand for AMD products.

The less-than-forecasted preliminary third quarter 2011 gross margin results are primarily due to less-than-expected supply of "Llano" and associated products with higher average selling price (ASP). Additionally, shipments of AMD's next-generation server processor, codenamed "Interlagos", occurred later in the third quarter than originally anticipated.

AMD will report third quarter 2011 results after market close on Thursday, Oct. 27, 2011. AMD will hold a conference call for the financial community at 2:00 p.m. PT (5:00 p.m. ET) that day to discuss third quarter financial results and to provide information regarding expected fourth quarter results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page at http://www.amd.com. The webcast will be available for 10 days after the conference call.