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(Refiles to fix typographical error in byline; Adds details of previous ATI related writeoffs)
By Sinead Carew
NEW YORK, Jan 16 (Reuters) - Advanced Micro Devices Inc AMD.N will eliminate 1,100 jobs, cut salaries and take a new $622 million charge for its acquisition of graphics chip maker ATI, bringing total writeoffs for the deal to $3.17 billion.
AMD, which trails Intel Corp (INTC.O) in the computer chip market, said the salary decreases range from 20 percent for its two top executive to 5 percent for lower level employees in North America and voluntary pay cuts in other regions.
The company, which has been criticized for overpaying for its $5.4 billion 2006 purchase of ATI Technologies Inc, warned in December it would have to take an additional charge after taking a $800 million impairment charge in its June quarter and more than $1.5 billion in writeoffs taken in 2007.
But Charter Equity Research analyst John Dryden said the extent of the writedown was was not a shock because it reflected the recent decline in AMD's share price rather than the performance of its graphics chips business.
"In fact graphics, which is 20 percent of the business, is outperforming microprocessors," said Dryden. "It's taken share from Nvidia Corp (NVDA.O) in the last couple of quarters. I expect that to extend into the first half of 2009 despite the weak economy."
As part of its cost cuts, it said Chairman Hector Ruiz and Chief Executive Dirk Meyer will temporarily take 20 percent salary cuts, while U.S. and Canadian executives at the level of vice president and higher will take 15 percent cuts.
North American employees who are not eligible for overtime pay will take 10 percent cuts, while overtime-eligible employees will see their pay reduced 5 percent. It is also implementing voluntary pay reduction measures for employees outside North America.
In addition, AMD is suspending matching company contributions to 401(k) employee retirement plans.
It said the job cuts will reduce its product company workforce, excluding foundry workers, by 9 percent and will come from attrition, divesting its handheld business and the elimination of another 900 positions.
In an emailed statement, AMD did not say how much money it expects to save from the actions and a spokesman declined to comment beyond the email.
AMD shares closed up 3 cents, or 1 percent, at $2.29 on New York Stock Exchange. Its shares have fallen almost 70 percent since the start of 2008 amid investor concern about weakening demand for its chips. (Reporting by Sinead Carew; Editing by Jeffrey Benkoe, Steve Orlofsky and Andre Grenon)