In a strategic move to strengthen its presence in the AI market, Advanced Micro Devices (AMD) is laying off approximately 1,000 employees, or 4% of its workforce, to concentrate on AI chip development. AMD’s decision aims to position the company more competitively against Nvidia, the dominant player in the AI chip sector, especially as demand surges from data centers powering generative AI platforms.
| Aspect | Details |
|---|---|
| Workforce Reduction | Laying off 4% of global workforce (around 1,000 employees) |
| Focus Shift | Strategic shift towards AI chip development, competing with Nvidia |
| Revenue Growth | Data center revenue doubled in the recent quarter, expected to grow 98% in 2024 |
| New AI Chip | Mass production of MI325X chip planned for Q4 2024 |
| Financial Strain | Increased R&D costs (+9%) and total sales costs (+11%) in Q3 |
| Stock Performance | AMD’s shares have dipped by over 3% this year amid AI market expectations |
Despite challenges in the PC and gaming segments, AMD’s data center revenue surged over twofold in the last quarter, with further growth anticipated as demand for AI-capable hardware escalates. Analysts predict AMD’s data center revenue to grow by 98% in 2024, significantly outpacing overall revenue growth expectations of 13%.
AMD has heavily invested in AI chip technology, targeting hyperscalers like Microsoft that require advanced processing for large-scale AI applications. The company plans to ramp up production of its latest AI chip, the MI325X, by the end of 2024, though expanding production remains challenging due to high costs and limited manufacturing capacity.
Although AMD’s shares have seen a slight decline this year, following substantial gains in 2023, the company’s shift towards AI reflects its strategic pivot toward what it sees as its biggest growth opportunity.