(Reuters) – Advanced Micro Devices is laying off 4% of its global workforce, or about 1,000 employees, as it shifts its efforts to developing AI chips in a bid to compete with industry leader Nvidia.
AMD is seen as Nvidia’s closest rival in the lucrative market for chips that make up the brains of complex data centers and can process the vast amounts of data used by generative AI technology like OpenAI’s ChatGPT.
“As part of aligning our resources with our greatest growth opportunities, we are taking a number of targeted actions,” an AMD spokesperson told Reuters on Tuesday.
Revenue from AMD’s data center segment, which houses its AI graphics processors, more than doubled in the September quarter. On the other hand, the personal computer segment grew 29%, while sales of its gaming unit fell about 69% during the period.
Analysts expect the data center unit to grow 98% in 2024, outpacing the expected total revenue growth of 13%, according to an average of estimates compiled by LSEG.
The company has invested heavily to develop AI chips that are expensive and in high demand by hyperscalers like Microsoft.
AMD plans to start mass production of a new version of its artificial intelligence chip called MI325X in the fourth quarter of this year. Scaling up production of AI chips is a costly endeavor due to limited manufacturing capacity.
The company’s research and development costs jumped nearly 9% in the third quarter, while total cost of sales rose 11%.
AMD shares have fallen more than 3% since the start of the year as the company struggles to meet high investor expectations after Wall Street doubled its shares last year, betting on returns linked to AI technology.
(Reporting by Arsheeya Bajwa in Bengaluru and Max Cherney in San Francisco; editing by Maju Samuel)
