AMD's Ruiz sees chip prices staying under pressure

BANGALORE: US chipmaker Advanced Micro Devices said on Thursday microchip prices will remain under pressure as it battles to return to profitability after posting four consecutive quarterly losses.

"The good news is for consumers -- prices keep going down," Hector Ruiz, AMD chief executive officer, told reporters in this southern Indian city after opening the company's third silicon design and research facility in India.

"The bad news is we always have to figure out how to still keep doing that and make money," he said.

"It is a very competitive industry and I don't see prices being anything but competitive in any segment of this industry," Ruiz added.

He said returning to profitability is the "number one goal" of AMD, the world's second-largest chipmaker, which has been fighting for market share against bigger rival Intel and posted four straight quarters of losses.

The company, which had debt of some 5.3 billion dollars at the end of September, this month sold an 8.1 percent stake to the Abu Dhabi government in a transaction that raised 608 million dollars after paying for expenses.

Ruiz, who became CEO of Sunnyvale, California-based AMD in April 2002, said he didn't foresee the technology industry being hurt by a slowdown in the US economy.

"We are fortunate in being in an industry that has pervasive applications," Ruiz said, a day after the US Federal Reserve warned that signs of a slowdown are starting to become apparent.

"We don't see a slowdown in the adoption of technologies." The US economy grew at a solid 3.9 percent pace in the third quarter but the US Federal Reserve and private economists expect a slower pace in the fourth quarter and into 2008, and some say a recession is possible if credit stays tight.

Indian information-technology companies have been concerned about a slowdown in the US economy hurting the country's software exports, which earned more than 31 billion dollars last year.

The US absorbs two-thirds of Indian software exports which are already earning fewer dollars because of the rupee's rapid appreciation and any cutback in orders from their biggest market could crimp profits at IT companies.

The US still remains a "vibrant economy" despite talk of a slowdown, Ruiz said, adding he was optimistic about microchip demand and confident problems in other sectors of the US economy won't spill over into the technology market.

AMD's new 52,000-square-foot facility in Bangalore, its second in the city known as India's Silicon Valley, will help develop next-generation computer processors for customers worldwide, company officials said.

The company's Indian researchers are testing the design of a new chip in a project known as Shanghai after helping it build the first quad-core Opteron processor featuring more powerful processing in a move to compete with Intel.