"We can confirm a worldwide reduction of 500 positions across various departments, levels and locations," AMD spokesman Mike Silverman said in an e-mail. Most of the affected employees were notified on Wednesday, he said.

Battered by a resurgent Intel and product delays, AMD has struggled to turn a profit in recent quarters. Last month, the chip maker reported a third-quarter loss of $67 million on revenue of $1.8 billion -- the company's eighth consecutive quarterly loss.

AMD executives hope to recover from their financial troubles, counting on new ATI graphics chips and the company's upcoming Shanghai server processor to turn things around. They are also cutting costs. Earlier this year, AMD announced plans to layoff around 1,600 staff, about 10 percent of the company's workforce at the time. The latest batch of layoffs represents 3 percent of the company's current staff.

In addition, AMD last month reached an agreement to spin off its manufacturing arm to Abu Dhabi's Advanced Technology Investment Co. (ATIC) in a valued at $2.1 billion, not including a commitment by ATIC to invest a further $3.6 billion in these manufacturing facilities over the next five years.

The deal should make life easier for AMD, relieving the company from the financial burden of maintaining its own plants. The manufacturing arm, which will be called The Foundry Co., will manufacture AMD processors under contract, according to terms of the deal, which should close in early 2009.