The Singapore-based company will lay off about 550 workers. It currently employs about 5,500 people worldwide, a Creative spokesman said.
In addition to sounds cards, Creative makes products such as the Nomad Jukebox digital audio player.
Other cost-cutting measures include closing Creative's plant in Malvern, Pa., moving its operations to Singapore, and "sharp cutbacks in selected nonrevenue generating Internet initiatives," according to a statement.
Counting other cost-cutting measures undertaken in its first quarter, Creative will take a one-time restructuring charge of about $8.5 million to $11 million in the current quarter.
The company added that "given the recent steep downturn in global equity markets and the resulting valuation outlook for privately held technology holdings," it expects a write-down of about $36.6 million against its investment portfolio during the current quarter.
"We believe that we need to take more aggressive actions than originally planned, given the severity of the economic climate and prolonged difficulties in the system builder space," said Craig McHugh, president of the company's U.S. unit.
Staff writer Susan Tsang reported from Singapore.