AMD to cut 1,600 of its employees

AMD hopes its acquisition of ATI will improve its graphics capabilities

Shares in chipmakers have been hit after Advanced Micro Devices (AMD) warned of lower-than-expected first quarter sales.

AMD said it would cut 10% of its workforce, which means more than 1,600 jobs will go.

It is struggling to compete with Intel while trying to get the full benefits from its $5.6bn (�2.8bn) acquisition of the graphic chip firm ATI Technologies.

AMD shares trading in New York closed down 6.3% at $6.03.

Product delays to AMD's Opteron server chip have also hit the firm.

Intel has not had an easy time competing either. Last year, it cut about 10% of its own workforce, which meant a reduction in jobs of about 10,500.

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