Advanced Micro Posts Loss

SAN FRANCISCO — Advanced Micro Devices Inc., the world’s No. 2 computer chip maker, said Wednesday that it swung to a loss in the first quarter and would spin off its memory chip business to focus on higher-profit processors.

Weak pricing for memory chips led Sunnyvale, Calif.-based AMD to record a loss of $17.4 million, or 4 cents a share, in the quarter, contrasted with a profit of $45.1 million, or 12 cents, a year earlier. Revenue was $1.23 billion, virtually flat compared with $1.24 billion last year.

The spinoff of the memory chip business, called Spansion, “further sharpens AMD’s laser-like focus on the microprocessor leadership opportunities we have in front of us and will help us to change the competitive balance in an industry that has long demanded it,” Chief Executive Hector Ruiz said.

AMD makes about 60% of its revenue from microprocessors, which run laptop, desktop and server computers. AMD’s chips, though, are overshadowed by those of archrival Intel Corp., which has a global market share of about 80%.

AMD is becoming increasingly competitive with Intel in standard 32-bit chips as well as chips that perform 64-bit computing, which process twice as much data at a time.

Taking Spansion public will allow AMD to reduce its exposure to the uncertain flash-memory market, said Rick Whittington, a semiconductor analyst at Caris & Co. “The aggravation is not worth the effort any longer,” Whittington said.

The flash-memory market continues “to experience industrywide oversupply and strong pricing pressure,” Chief Financial Officer Robert Rivet said. “We experienced a rise in unit shipments, but our average selling price declined significantly, resulting in weaker-than-expected sales.”

AMD shares were buoyed during after-hours trading by news of the spinoff. They had fallen 17 cents to $17.06 on the New York Stock Exchange but after the session rallied to gain 29 cents following the earnings announcement.

Spansion is a joint venture with Fujitsu Ltd. of Japan and is the world’s largest company manufacturing just flash memory, or the type of memory chips that retain information when devices are turned off. Flash is used by digital cameras, mobile phones, personal digital assistants and other devices.

Spansion recorded revenue of about $2.3 billion last year.

Associated Press was used in compiling this report.