Advanced Micro Devices (AMD) will lay off approximately 1,000 employees, or 4% of its global workforce, as the company pivots its focus towards the growing market for artificial intelligence (AI) chips, according to a Reuters report. This move is aimed at ramping up AMD’s efforts to compete with Nvidia, the industry leader in AI and data center technologies.
AMD has been making significant strides in the AI sector, where demand for powerful chips is soaring. These chips are used in data centers to power AI applications like OpenAI’s ChatGPT, which rely on high-performance hardware for processing large volumes of data.
“As part of aligning our resources with our largest growth opportunities, we are taking a number of targeted steps,” an AMD spokesperson told Reuters.
AMD’s data center segment, which includes the company’s AI-focused graphics processors, has seen impressive growth. In the most recent quarter, the data center division’s revenue more than doubled. Meanwhile, AMD’s personal computer business grew by 29%, but its gaming division suffered a steep decline of 69% in sales.
Analysts are optimistic about AMD’s future in the AI space, with predictions that the company’s data center revenue could grow by nearly 100% in 2024, far outpacing overall revenue growth. This growth is largely attributed to increased demand for AI chips from large cloud providers and tech companies.
AMD is investing heavily in developing and producing AI chips, including its upcoming MI325X chip, which is expected to enter mass production later this year. However, increasing AI chip production is a costly endeavor, with limited manufacturing capacity in the industry.
The company’s research and development (R&D) costs rose nearly 9% in the third quarter of 2024 as part of these efforts. Total costs also increased by 11% during the same period.
Despite the positive performance in the data center segment, AMD’s stock has faced challenges in 2024. Shares have dropped by more than 3% this year as the company works to meet high expectations from investors. Last year, AMD’s stock surged on optimism about AI, but the company has yet to fully deliver on the market’s growth expectations.
As the AI chip market continues to grow, AMD’s ability to scale production and compete with Nvidia will be crucial to its success. The next few years could prove pivotal in determining how well AMD can capitalise on the demand for AI technology and whether it can secure a larger share of the market.
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