Following the recent lay-off of 600 employees, chip manufacturer AMD is to cut a further 1 100 jobs and introduce pay cuts from February ranging between 5% and 20%.

In an e-mail to staff headed "A New Reality", AMD president and CEO Dirk Meyer, says the new measures are necessary as "we are weathering a monster of an economic storm, one that requires additional swift action and some very difficult decisions."
The full text of Meyer's e-mail is as follows:
TO: AMD Employees
FROM: Dirk Meyer, AMD President and CEO
RE: A New Reality
The last few months have been humbling for virtually every company in every industry around the world. Global demand is down dramatically. And uncertainty about both the timing and intensity of a potential recovery has risen. This combination has made our goal of regaining profitability and free cash flow more difficult – and more important – than ever.
At a time like this, I think it's important to remind ourselves and our teams of two 'undeniable truths' that should keep us motivated about the future. The first is that we play a critical role in an essential
industry. Our customers both want and need us to thrive . and we have the assets, both in the form of IP and people, to succeed. Second, great companies see major disruptions such as this one as opportunities. Economies always rebound, demand picks up, and future success goes to those who make the right choices to position themselves for the inevitable turnaround. We have lived through adverse times before, and we will do so again.
Meanwhile, we are weathering a monster of an economic storm, one that requires additional swift action and some very difficult decisions. First, we are going to have to further reduce our headcounts and our budgets immediately, to help meet a new, lower breakeven target. More specifically, our current plan is to reduce our headcount by approximately nine percent of AMD's 'product company' headcount in the first quarter through a combination of attrition, previously communicated divestitures, and a reduction in workforce. These reductions will be primarily focused on manufacturing and sales, marketing, and general and administrative functions, while limiting R&D reductions wherever possible.
But, while taking these difficult actions, we also must protect our core capabilities – beginning with our ability to execute our roadmaps. We have been watching very carefully what great companies around the world are doing to cope with this crisis, and thinking deeply about what our shareholders and employees would want and expect us to do. More and more leadership teams are taking a temporary, significant reduction in base salary, with Lenovo and Freescale as recent examples. It is time for us to take similar action. Beginning in February, I will be taking a temporary reduction of 20 percent in base salary. In the U.S. and Canada, we will implement similar salary reductions of 15 percent for VPs, 10 percent for all other non-overtime eligible employees, and 5 percent for all overtime-eligible employees. Outside North America, I am asking all AMDers to take comparable pay cuts – the details of which will be determined with local management next week.
I know this will be a personal sacrifice for all of you, but at the same time I know you want to limit headcount reductions as best we can in order to preserve investments that will drive our future success. I also want to emphasize that these actions are temporary, and we will revisit them every quarter and will begin reversing them when business conditions and financial performance return to acceptable levels.
In addition, the following changes in our benefits plans are scheduled to take effect immediately:
· suspend the 401k (U.S.) company match, and
· delay the implementation of the RRSP (Canada) company match
In the meantime, we need you and your teams to continue treating every discretionary spend decision as though it were your own, including continuing the hiring freeze, scrutinizing all overtime and contract
labor activity and eliminating all travel not related to serving key customers and growing revenues.
All of these actions are disheartening, but necessary in these extraordinary times. It is hard to know the size and timing of the recovery. But we do expect our cost structure to be better matched to
business conditions in the second half of this year. Indeed, our goal is to avoid a cash drain in the first half of this year and begin making profits and generating cash in the second half. I know you will have
questions, and I encourage you to speak with your manager and your HR business partners, and read the Q&A document> for more details.
We have recently turned the corner on a number of bold moves – the kind of behavior expected of winners. Our graphics team has successfully retaken the performance title, and innovations like Shanghai, along with our Yukon and Dragon platforms, are gaining industry and customer traction. Meanwhile, we are rapidly approaching a major milestone in our industry-changing "Asset Smart" strategy.
AMD is a company with a rich history of success, and a great will to succeed. We have lived through tough times before – and we will do so again today. It all comes down to how much we believe in our future success. I believe it, your executive team believes it . and I need you to show that you believe it. I am calling on each of you to understand and support these actions – and to do what it takes to secure AMD's long-term success.
The future is what we resolve it to be – and what we work together to deliver.