Advanced Micro Devices wields the ax (Photo: Flickr)

Chipmaker AMD announced some big layoffs on Thursday, saying it needs to cut costs in order to push into new markets and stay ahead of rivals.

The company is laying off about 1,400 people, a bit more than 11 percent of its workforce of 12,000. The cuts will come from all parts of the company, says Drew Prairie, a company spokesman. “It’s from vice president all the way down to individual contributors.”

AMD hired a new CEO, Rory Read, in August, and he’s trying to push the company into new markets. Building chips that don’t gobble up a lot of power is the current fixation in the chip industry. This helps out in both mobile devices such as the iPhone and in the servers that power massive data centers.

Prairie says that AMD want to take some of the $200 million it will save from the layoffs and other cost-cutting initiatives and funnel that money into new initiatives. “It’s about putting in place a competitive cost structure, but it’s also about accelerating some of our future growth opportunities,” he says.

In other words, AMD will hire people after it’s done with the job cutting. Prairie couldn’t say how many people the company expects to hire.

The layoffs took chip analyst Nathan Brookwood by surprise. AMD has had some trouble cranking out enough of its new Vision A series processors to meet demand, but it has actually been gaining share against Intel in the PC market.

“I think what it comes down to is they may want to redeploy people to focus on these low-power chips,” says Brookwood, with research firm Insight 64.

Two months ago, AMD hired the designer of Apple’s iPhone 4, Mark Papermaster, as its chief technology officer.

The company may be getting ready to double-down on its own X86 designs, or it may be getting ready to produce its own variation of the low-powered ARM microprocessor, which has sparkled in the mobile phone and touchscreen markets.

AMD expects that the layoffs will be completed by the end of March 2012. Says Kevin Krewell, an analyst with chip-research firm The Linley Group: “AMD is either heading toward a direct conflict with ARM or it’s heading toward a partnership.”