AMD Lays Off 1,000 Employees as It Shifts Focus to AI Chips Amid Competition with Nvidia

Advanced Micro Devices (AMD) has emerged as Nvidia’s closest rival in the lucrative market for chips powering complex data centers. These chips play an essential role in processing the vast amounts of data used by generative AI technologies like OpenAI’s ChatGPT.

On Wednesday, AMD announced that it would lay off approximately 1,000 employees, about 4% of its global workforce. This move comes as the company sharpens its focus on developing AI chips to compete with industry leader Nvidia.

An AMD spokesperson highlighted that the company is “strategically aligning resources” to focus on sectors with the greatest growth potential. This strategy seems to be paying off: AMD’s data center revenue more than doubled in the third quarter, fueled by demand for AI graphics processors. However, the company’s performance varied across divisions; while personal computer revenue rose by 29%, the gaming segment saw a steep 69% drop in revenue.

Analysts are optimistic about AMD’s AI ambitions, with predictions from LSEG suggesting the company’s data center segment will grow by 98% in 2024, vastly outpacing its projected overall revenue growth of 13%. The shift to AI has required significant investment; in the third quarter, AMD’s R&D expenses rose nearly 9% as it prepares for mass production of its latest AI chip, the MI325X, in the coming months. These efforts reflect AMD’s push to secure a foothold in an increasingly competitive market dominated by Nvidia, especially as demand for high-performance AI chips intensifies from hyperscale companies like Microsoft.

Despite this, AAMD’sstock is down over 3% this year, a surprising outcome given the broader AI boom. The company now faces the challenge of meeting heightened investor expectations following last year’s massive AI-driven surge in Wall Street interest.