AMD hopes its acquisition of ATI will improve its graphics capabilities
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Shares in chipmakers have been hit after Advanced Micro Devices (AMD) warned of lower-than-expected first quarter sales.
AMD said it would cut 10% of its workforce, which means more than 1,600 jobs will go.
It is struggling to compete with Intel while trying to get the full benefits from its $5.6bn (£2.8bn) acquisition of the graphic chip firm ATI Technologies.
AMD shares trading in New York closed down 6.3% at $6.03.
Product delays to AMD's Opteron server chip have also hit the firm.
Intel has not had an easy time competing either. Last year, it cut about 10% of its own workforce, which meant a reduction in jobs of about 10,500.
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