UPDATE 1-AMD expects key business to turn profit in 2010

* AMD sees core business profitable in 2010

* Says servicing debt remains a top priority

* Expects to be a cash flow "machine"

SUNNYVALE, Calif., Nov 11 (Reuters) - Advanced Micro Devices (AMD.N) said it expects its chip design business, the backbone of the company, to be profitable next year, adding more fuel to hopes that the technology sector is rebounding.

AMD executives, speaking to analysts, investors and media during an event at its headquarters on Wednesday, also sought to address concerns about the company's heavy debt load.

"We're going to turn into a cash flow generating machine," said Chief Executive Dirk Meyer after discussing some of the company's upcoming chip designs. "I can already hear the cash registers starting to ring, which is wonderful."

The company said that ideally it will keep $1 billion of cash on hand and that the rest will be used to pay down debt.

In spinning off Globalfoundries, its semiconductor manufacturer, and purchasing graphics chips specialist ATI, the chip company's reported debt ballooned to roughly $3.9 billion a year ago, according to Thomson Reuters I/B/E/S.

In its third-quarter earnings release, the company said it had reduced its debt to just under $3.2 billion.