Digital Trends

Chipmaker AMD has cut its sales forecast and revealed it plans to cut 10 percent of its workforce.

Citing a drop in sales, chipmaker AMD has announced it will lay off over 1,600 employees, or about 10 percent of its workforce, between now and September in a bid to cut costs and return to profitability. AMD will also incur a restructuring charge during the second quarter, but didn't estimate its amount. AMD is scheduled to release it's first quarter financials on April 17.

AMD says the drop in its revenues is larger than the seasonal decline it anticipated at the start of the year, but the company expects to return to profitability in the second half of 2008 when its first 45nm process CPUs hit the market.

AMD estimates its revenue for its first quarter of 2008, ended March 29, will be about $1.5 billion, which would represent more than a 20 percent increase from the same quarter a year ago, but a 15 percent decline from the last quarter of 2007.

Many industry watchers weren't particular surprised by the news, citing delays in getting 45nm chips to market and the overhead of AMD's perhaps overly-ambitious acquisition ot graphics developer ATI back in 2006. At the end of 2007, AMD admited it overpaid for ATI and wrote down $1.6 billion related to the acquisition. AMD revenues were also dogged by an embarrassing bug in AMD's quad-core Barcelona CPU that no doubt limited its sales in the first two months of 2008.