The Sunnyvale, California-based chipmaker has been dealing with weaker revenue and profits for some time and posted third-quarter results Thursday that missed market expectations.
The company expects the reductions and related real estate moves will save $85 million in 2015.
AMD employed 10,149 people as of the end of its third quarter. It plans to cut the jobs by the end of its fourth quarter. The company will take a $57 million charge, largely for severance, during that final quarter.
Shares of Advanced Micro Devices Inc. fell nearly 5 percent to $2.51 in extended trading following the announcement. As of Thursday's close, the stock is down by nearly one-third in the year to date.
It is the first move by AMD's new CEO, Lisa Su, a former chief operating officer who replaced Rory Read just over a week ago.
AMD also said Thursday that it earned $17 million, or 2 cents per share, in its most recent quarter. Its earnings, adjusted for amortization costs, came to 3 cents per share. Analysts surveyed by Zacks Investment Research were anticipating earnings of 4 cents per share. A year ago the company earned $48 million, or 6 cents per share.
The chipmaker posted revenue of $1.43 billion in the period, down from $1.46 billion last year and also short of Street forecasts. Analysts expected $1.47 billion, according to Zacks.
For the fourth quarter, AMD expects revenue to decrease 13 percent, plus or minus 3 percent, from the third quarter. Analysts surveyed by FactSet expect revenue of $1.48 billion, which implies growth of 3.7 percent.