The company reported a loss of US$128 million, or $0.18 a share, for the quarter ended Sept. 26. The loss is lower than the $134 million, or $0.22, the company reported in the third quarter of 2008.

AMD reported revenue of $1.4 billion, down 22 percent compared to the previous year, but topping expectations of $1.26 billion based on estimates polled by analysts at Thomson Reuters. Revenue increased by 18 percent compared to the second quarter. 

The company saw strong demand for its processors and graphics chips during the third quarter, said Dirk Meyer, AMD's president and CEO, in a statement. Microprocessor and graphics unit shipments grew compared to the second quarter.

The company also benefited from higher average selling prices and an increase in shipment of chips manufactured using the new 45-nanometer process. During the previous quarter the company was affected by falling chip prices and an aging inventory of old chips made using the older 65-nanometer process.

The company took a number of recent steps in order to reach profitability. In the first quarter it spun off manufacturing assets to a separate company called GlobalFoundries, which unloaded close to $1.1 billion in debt from AMD's books. GlobalFoundries is a joint venture with investment firm Advanced Technology Investment Company, which is owned by the Abu Dhabi government.