Chip-maker AMD has announced that it is to slash its workforce by 10%, as the latest chapter unfolds in its cut-throat rivalry with market-leader Intel.

The Sunnyvale-based firm has said that at least 1,650 jobs will go, from a total of about 16,800 worldwide.

Analyst Doug Freedman of American Technology News welcomed the company's cost-cutting moves saying that, in the past, AMD has not been "efficient with the workforce it has".

"I don't think this cut will be material to its ability to be effective," said Freedman. "[AMD] will emerge leaner and meaner. We saw what this did at Intel after it started cutting jobs."

Lengthy product delays for AMD's new Opteron server chip have damaged the company's competitiveness, and AMD's market value has plunged from US$20bn to $3.84bn in the past two years.

AMD is also struggling to digest its $5.6 billion acquisition of graphics chip-maker ATI Technologies Inc, which AMD recently said is worth about 30 percent less than when it was acquired.

Nonetheless, the firm views the acquisition as a key way to attack Intel and to incorporate better graphics capabilities into its chips.

Last week, computer manufacturer Dell announced that it was to cut 8,800 jobs. It also emerged that unemployment in the US is currently at a three-year high.

Further reading

AMD redefines processor metrics