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AMD cuts Q3 rev view on supply issues; shares fall

A technician of computer microprocessors maker AMD poses for the media with a wafer at the chip plant in Dresden
A technician of computer microprocessors maker AMD poses for the media with a wafer at the chip plant in Dresden

(Reuters) Advanced Micro Devices Inc cut its third-quarter revenue and gross margin forecast citing manufacturing issues at its German foundry supplier.

Shares of the company fell 10 percent to $5.56 in extended trading on Wednesday.

The company forecast third-quarter revenue to be 4-6 percent higher than the second quarter. It had earlier forecast 10 percent growth, and plus or minus 2 percent to that.

AMD, like larger rival Intel Corp, manufactures chips for a range of electronic devices. The company's 'Llano' range of chips were launched in June and were built for mainstream desktops and laptops. The chips are built in two sizes -- 32 nanometer and 45 nanometer.

The company said the revenue forecast cut was mainly due to 32 nm yield, ramp and manufacturing issues at Globalfoundries' German factory that limited the supply of its Llano chips.

AMD also said 45 nm supply was less than expected due to difficulties related to the use of common tools across technology nodes.

The chipmaker, which cut its gross margin forecast to 44-45 percent, said the shortfall was due to lesser-than-expected supply of Llano and associated products with higher average selling prices.

The company said longer-than-expected delays in shipments of its next-generation Interlagos server processor will also affect margins.

(Reporting by Siddharth Cavale in Bangalore; Editing by Sriraj Kalluvila, Maju Samuel)

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