AMD starts writing off inventory to clear out old distributor stocks

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According to AMD’s latest statements at the Goldman Sachs Technology conference last week, the company has been planning to use the same tactic as the socket FM1 to FM2 switch, writing off inventory left in the sales channel and controlling the distribution of product more so that they don’t end up flooding it again with cheap parts. AMD’s CFO, Devinder Kumar, admitted that AMD’s channel space was “not healthy” and they were looking into doing more price drops to clear out stock from the sales channel to make way for new products planned for release this year.

According to recent estimates by AMD, old stock in the partner sales channels amounts to around $100 million, quite a hefty load to bear for a dwindling market that is also seeing decreased support for a lot of AMD’s products. Kumar said that AMD wrote down $58 million of that stock’s worth to clear the channel and ease the burden on their partners.

“If you’re selling and it’s not somehow getting consumed by the end customer at some point, that’s a problem,” said Kumar in his speech at the conference. “We’re willing to take the pain to go and correct the channel inventory situation as opposed to continuing to put the parts in the overall channel.”

Some channel partners have opened up about the issue and one admitted to reporters from The Register that the company was indeed making amends for the troubles in the sales channel, assisting distributors and partners wherever they can.

“AMD is in the middle of a big clear out,” one anonymous partner revealed. “They created a huge grey market and are trying to get it back under control.”

That “grey market” in case you were wondering is very much a result of the Bitcoin mining craze that has taken hold over the last three years. For miners dealing in Bitcoin and Altcoins, Radeon cards held their own against dedicated mining ASICs up to a point and the ability to simply scale up mining operations by adding more GPUs which were readily available at the time helped immensely to fund the boom.

Unfortunately, now that dedicated miners have been created for mining Altcoins, it has been less profitable to run mining operations off graphics cards and miners have been selling off their old equipment for cheap, flooding the second-hand market with cards such as the Radeon R9 290X for as little as R3500 when the mass selling began to hit locally. During the mining craze in the US, though prices for most Radeon cards practically doubled and they were snapped up by miners almost as soon as they became available.

Source: The Register