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IDG News Service - Chip maker Advanced Micro Devices will shed 1,100 more jobs and cut salaries as it tries to reduce costs in a tough economic environment, the company said Friday.

The company will lay off 900 at all levels of its product business, and will shed a further 200 positions through attrition and by divesting its handheld business, according to spokeswoman Hollis Krym. The cuts affect 9% of AMD's work force of 12,000, and come on top of hundreds of job cuts the company announced last year.

None of the 3,000 workers within AMD's foundry operations, which were spun off in October into a separate company, will be affected, Krym said.

AMD will take a goodwill impairment charge of $622 million relating to its October 2006 acquisition of graphics card maker ATI Technologies for $5.4 billion when it announces its results for the quarter ended Dec. 27.

The company also plans a deep round of salary cuts. CEO Dirk Meyer's base salary will be temporarily reduced by 20%, subject to approval by AMD's board of directors' compensation committee.

Salaries of vice presidents across AMD will be slashed by 15%, with employees not eligible for overtime taking a 10% cut and overtime-eligible employees taking a 5% cut.

AMD employees outside North America will also see pay cuts consistent with local policies and regulations, AMD said.

Also suspended are matching contributions for U.S. employees' 401k retirement investment funds. For Canadian workers, AMD will delay implementing the Registered Retirement Savings Plans matching program.

The changes will help AMD protect its ability to follow through on its technology roadmap, the company said. Krym said the cutbacks are "nothing highly unusual right now in the industry."

AMD has undertaken several restructuring measures combined with layoffs in order to stay competitive in the chip market, which is dominated by rival Intel.

In October, AMD said it would split into two companies, one that will design chips and one that will make chips. Analysts said the move would allow AMD to concentrate on product design rather than manufacturing and could help it compete better with Intel.

The Advanced Technology Investment Company (ATIC), owned by the government of Abu Dhabi, will invest $1.4 billion in a entity tentatively called The Foundry Co. and also pay AMD $700 million. AMD will contribute intellectual property rights and also hand over control of two fabrication plants near Dresden, Germany.

ATIC plans to spend between $3.6 billion and $6 billion to redevelop one of AMD's fabrication plants near Dresden and build a new one in New York. The Foundry Co. will also make chips for other companies.

Another Abu Dhabi government investment fund, Mubadala Development Co., said it would pay AMD $314 million for a larger stake in the company. The investment would result in Mubadala owning 19.3% of AMD.

In October, AMD reported its eighth consecutive quarterly loss. The company lost $67 million on revenue of $1.78 billion, which was up 14% over the same period a year prior.

In November, AMD said it would lay off 500 workers, which followed layoffs of 1,600 workers earlier in 2008.