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AMD drastically cuts its chip orders as its PC sales decline

AMD isn't doing so well financially, and it doesn't look like things are going to get better anytime soon as the processor maker has announced it would cut its chip wafer purchases from Globalfoundries by nearly 75 percent for the fourth quarter of 2012.

Bloomberg reports that while AMD previously planned to pay Globalfoundries $500 million for its wafers, it will end up buying just $115 million of the chips. This is just the latest piece of bad news from AMD. In October it announced that it would cut 15 percent of its workforce by the end of the year.

The new and reduced chip agreement with Globalfoundries means that AMD must also pay an additional $320 million termination fee, which must be paid to Globalfoundries by the end of 2013. AMD has been losing money for the past few quarters but claims that it will "return to free cash flow generation in the second half of 2013."

This news comes after the NPD Group claimed total sales of Windows PCs went down 21 percent in the first four weeks since the launch of Windows 8. PC makers such as Dell, Toshiba and Sony have all said that sales of Windows 8 PCs were about as they expected, although there does appear to be a supply issue with touch screen notebooks, tablets and convertibles. AMD chips haven't been featured in many major Windows 8 releases from leading computer manufacturers.

Source: Bloomberg | Image via AMD

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