Sydney (AFP) - Malcolm Young, one of the founding members of veteran Australian rockers AC/DC, has dementia and is being treated in an aged care facility in Sydney, reports said on Friday.

The high-voltage group, one of the biggest grossing bands of all time, announced on Thursday that the rhythm guitarist had retired after 41 years due to unspecified health issues.

But they said the group would continue, with an upcoming new album, "Rock or Bust", due out in December and world tour planned for next year.

The Australian newspaper said Young, 61, suffered a stroke last year while the Sydney Morning Herald reported that he has dementia and was now a full-time patient at an exclusive Sydney care home.

"If you were in the room with (Young) and walked out then came back in one minute later he wouldn't remember who you are," the Herald's veteran music writer Bernard Zuel cited a Young "family connection" as saying.

"He has a complete loss of short-term memory. His wife Linda has put him in full-time care."

Young and his brother Angus founded the band in Sydney in 1973, and it has gone on to sell more than 200 million albums.

In announcing a new record on Thursday, AC/DC said Malcolm Young would not be returning to the lineup after he took a break earlier this year, with his nephew Stevie Young taking his place.

"Unfortunately, due to the nature of Malcolm's condition, he will not be returning to the band," they said on their website.

"AC/DC will undertake a world tour in support of 'Rock or Bust' in 2015. Stevie Young, nephew of founding members Angus and Malcolm Young, plays rhythm guitar on 'Rock or Bust' and will accompany the band on tour."

News of Young's illness in April sparked rumours that the band could fold, but drummer Phil Rudd said last month: "It'll never happen. Angus will never retire and as long as Angus never retires I won't retire either."