Shareholders and employees of Advanced Micro Devices received a double dose of bad news Tuesday as the Sunnyvale-based chip maker announced that it is cutting 2,300 jobs

Shareholders and employees of Advanced Micro Devices received a double dose of bad news Tuesday as the Sunnyvale-based chip maker announced that it is cutting 2,300 jobs and Gateway said it will no longer use AMD processors in its personal computers. AMD said that it is closing two plants in Austin as a move to cut costs and focus on its two core businesses, microprocessors and flash memory, amid a major downturn in both the PC and semiconductor industries and a fierce price war with rival Intel. About 1,000 of the job cuts will come from closing the Austin plants, and the balance will come from restructuring AMD facilities in Penang, Malaysia. The two fabrication plants in Austin, called Fab 14 and Fab 15, primarily make networking and older embedded chips on a contract basis for businesses that AMD has already sold off, such as Legerity, its communications chip business. Gateway, a leading direct seller of PCs based in San Diego, said it decided to drop AMD's chips in favor of Intel's as it tries to simplify its product lines to save engineering and manufacturing costs. Lisa Emard, a spokeswoman for the struggling PC maker, said the company will phase out the Gateway Select line, which used AMD's Athlon and Duron processors, over the next few months.