AMD has announced it will cut 1,100 jobs in a bid to reduce costs and survive the economic downturn.

The processor manufacturer also revealed it was implementing a number of pay cuts, and will write off $622m (£424m) from the value of its graphics chip company ATI, which it purchased in 2006 for $5.4bn (£3.7bn), bringing the total write off for the deal up to $3.17bn (£2.16bn).

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However, analysts claimed AMD's share price decline is to blame and not a downturn in the graphics industry.

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John Dryden, analyst at Charter Equity Research, told Reuters: "Graphics, which is 20 percent of the business, is outperforming microprocessors. It's taken share from nVvidia in the last couple of quarters. I expect that to extend into the first half of 2009 despite the weak economy".

The company also confirmed it would stop its contributions to 401,000 pension plans. However AMD declined to reveal how much money the cost cutting actions would save.

See also: Dual-core AMD Neo targets high-end netbooks