The departure of Advanced Micro Devices' chief executive followed months of concern among some board members that he wasn't doing enough to get the chip maker into the exploding mobile market, a company source said.
PC chip maker AMD's shares slumped 9 percent to close at US$8.36 on Tuesday after the company unexpectedly said late the day before that Dirk Meyer was leaving as the result of a "mutual agreement" with the board of directors.
Much of the reason for Meyer's departure had to do with currents of discontent on the board about AMD's choice not to pursue making chips for the mobile market other than netbooks, the company source told Reuters.
In October, Meyer had told analysts that even though tablets like Apple's iPad were eating into demand for laptops, AMD would hold off on investing to develop microprocessors for that market until it grew more.
AMD focuses on making chips for personal computers and servers, and competes directly against much larger Intel.
"Strategically they (the board) didn't feel like Dirk was taking them down the road they wanted to be on. They wanted to be on the Yellow Brick Road toward tablets and smartphones," said Patrick Wang, an analyst at Wedbush.
People may increasingly depend on tablets and smartphones - instead of PCs - as their main point of contact with the Internet, experts say.
Those devices typically use more power-efficient chips than the so-called x86-based processors sold by Intel and AMD that have served as the main processing brains of PCs for years.
(Reporting by Noel Randewich; Editing by Tim Dobbyn, Gary Hill)