AMD will reduce its workforce by 10% in a bid to cut costs and drive operational efficiency.
The US-based company said the job cuts will provide costs savings of around $10m in the fourth quarter of 2011 and $118m in 2012.
Rory Read, AMD president and CEO, said the changes will help the company achieve a leadership position in emerging markets and the cloud.
"Reducing our cost structure and focusing our global workforce on key growth opportunities will strengthen AMD's competitiveness and allow us to aggressively pursue a balanced set of strategic activities designed to accelerate future growth," he said.
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AMD confirmed job cuts would be made globally and will be completed by the first quarter of 2012. AMD said cost savings will also be found by ending some contractual commitments.
A report by Wall Street Journal (WSJ) said senior managers and lower-rank employees will be affected.
Overall, AMD believe more than $200m of operating savings will be made in 2012, allowing investment in the cloud and lower power, emerging markets.
Roy Read became CEO at the company following the departure of former chief executive Dirk Meyer in January 2011 amid board concerns about missing out on the mobile market.