AMD has been hit hard by the economic downturn, and has now admitted that it is going to take the drastic step of cutting 500 employees.

The company currently has a total staff of 15,500, but has not said where the job losses have been made.

The news comes after an announcement in early October that AMD is spinning off its manufacturing arm.

The $5.7 billion venture is called The Foundry Company and is a joint enterprise with Advanced Technology Investment Company (ATIC) in Abu Dhabi.

The Abu Dhabi firm has also committed to investing another $3.6 billion to $6.0 billion over five years to fund the venture's expansion.

The Foundry Company will be based in Dresden, Germany as well as get a new "state-of-the-art facility" in New York.