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AUSTIN-The capital city’s economy, already suffering from the severe technology slowdown and a resulting glut of sublease office space, received another blow Tuesday. Advanced Micro Devices Inc. said it will close two chip manufacturing plants in Austin and cut 1,000 jobs. The company will have about 3,200 workers in Austin after the reductions.

The closures are part of an extensive restructuring in which the company will cut another 1,300 from its operations in Penang, Malaysia. The total of 2,300 jobs is about 15% of AMD’s work force. The company, based in Sunnyvale, CA will take a one-time charge of between $80 million and $110 million in the current quarter, its third. The company said the restructuring should reduce costs by $125 million a year.

The two plants being closed–Fabs 14 and 15–are the company’s oldest, built in 1984 and 1986, respectively. Each has 22,000 sf of clean-room space and they are not equipped to make chips of recent design. By contrast, AMD’s Fab 25, the company’s second-newest plant, has 86,700-sf of clean room space. “Their technology is at least 10 years old,” Greenagel says of the older fabs, “which is ancient.”

About 90% of the fabs’ business has been for businesses that AMD has sold or spun off. He says AMD has received inquiries from potential buyers of the sites, but agreements have not been reached. “We would be amenable if we could find something that would extend their useful life and provide jobs,” Greenagel says. “Make us an offer.” The company will continue operating Fab 25 in Austin and Fab 30, its newest plant in Dresden, Germany.

AMD said the cuts will allow it to focus on its two main businesses: personal computer processors and flash memory processors, cell phones, digital cameras, handheld computers and Internet hardware. “These actions will allow us to reduce costs without impairing our new product development activities in pursuit of long-term growth opportunities,” W.J. “Jerry” Sanders III, the company’s chairman and CEO, said in a prepared statement. “We will focus our organization around our two most promising opportunities–flash memory devices and PC processors.”

AMD will continue to move ahead with plans for a new chip plant to be built in 2004 or 2005, AMD spokesman John Greenagel tells GlobeSt.com. Several Central Texas locations have been jockeying for the plant, but AMD has yet to pick.

Austin companies have cut 17,530 from January through July, according to the Angelou Economics firm. Austin-based Dell Computer, the top personal computer producer in the world, has cut or said it will cut 8,700 jobs. Schaumburg, IL-based Motorola Inc. has eliminating about 1,000 positions in its Austin semiconductor operations. Last week, Applied Materials Inc., a maker of semiconductor-manufacturing equipment based in San Jose, CA said it is axing 500 jobs in Austin.

AMD is engaged in a furious uphill battle with Intel Corp., the biggest processor maker. After years of missteps, AMD’s recent processors have won business from a range of computer makers such as Compaq Computer Corp., based in Houston. AMD, Intel and Motorola also are suffering the effects of a worldwide slowdown in personal computer sales. Earlier this year, Intel stopped work on a 10-story, 435,000-sf building in Austin’s CBD.

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