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AMD may transfer its production

NEW YORK -- Advanced Micro Devices Inc., the world's second-biggest maker of computer processors, may announce plans to transfer more production in the next two to three months to reduce costs, a Lehman Brothers Holdings Inc. analyst said.

Sunnyvale, California-based Advanced Micro gained 13 cents, or 1.9 percent, to US$6.96 at 4 p.m. in New York Stock Exchange composite trading Thursday.

Advanced Micro "continues to be very focused on developing an asset light plan," said analyst Tim Luke after meeting with Chief Financial Officer Robert Rivet earlier this week. "Developing an asset light approach is of critical strategic importance to AMD given the strains on its balance sheet."

Chief Executive Officer Hector Ruiz has said the company is looking at ways to lower the burden of spending on semiconductor plants that cost more than US$3 billion to build and equip. He has declined to give details of what he calls an "asset smart" strategy saying that it mighat give rival Intel Corp. the opportunity to undermine his plans. Analysts have speculated that Ruiz might sell his plants to another company or shift production to companies including Taiwan Semiconductor Manufacturing Co.

"We are looking at ways to lighten our capital load on our balance sheet through partnerships like the one we have with IBM," said AMD spokesman Drew Prairie. The company shares a plant with IBM in New York that gives it access to testing facilities. "We are looking to do similar relationships to that but in the manufacturing sector," Prairie said.

Luke, who is based in New York, said the asset-light plan may be a catalyst in the second half as "near-term visibility" on Advanced Micro's first-quarter sales targets is "limited."

Advanced Micro shares have retreated by more than half in the past year. Last month, the company reported its fifth consecutive quarterly loss because of US$1.61 billion of expenses from the purchase of ATI Technologies Inc.

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