AMD is laying off about 1,000 employees, or roughly 4 percent of its global workforce, as it shifts its focus towards AI chip development to compete with industry leader Nvidia. This move is part of Nvidia’s strategy to realign resources toward high-growth areas, particularly AI technology, which is increasingly in demand in sectors like data centres and generative AI.
An AMD spokesperson explained the company’s decision to Reuters, saying, “As a part of aligning our resources with our largest growth opportunities, we are taking a number of targeted steps.”
The move comes at a time when AMD’s data centre segment, which includes its AI graphics processors, is seeing rapid growth. In the September quarter, revenue in this segment surged more than twofold, reflecting the rising demand for powerful chips to support generative AI applications like OpenAI’s ChatGPT. In comparison, the company’s personal computer segment grew by 29 percent, while its gaming division faced a significant downturn, with sales falling by nearly 69 percent.
Looking ahead, analysts predict that AMD’s data centre unit will continue to be a key growth driver, with expected growth of 98 percent in 2024—far outpacing the company’s overall revenue growth of just 13 percent. This growth is fueled by the demand for AI chips, which are used by major cloud providers like Microsoft, known as hyperscalers, who rely on these chips to power their massive data centres.
In response to the increasing need for AI chips, AMD is ramping up production of its new MI325X AI chip, with mass production set to begin in the fourth quarter of this year. However, manufacturing AI chips is costly, as it requires significant investment in production capacity, which has led to a rise in AMD’s research and development costs by nearly 9 percent in the third quarter. Additionally, its total cost of sales increased by 11 percent.
Despite the company’s focus on AI and its growth in the data centre market, AMD’s stock has dropped by over 3 percent this year.