Advanced Micro Devices (AMD) is reportedly laying off 4 percent of its global workforce, or about 1,000 employees, to prioritise the development of AI chips, aiming to rival Nvidia in the high-stakes AI hardware market. AMD is seen as Nvidia's main competitor in the lucrative chip market that powers the data centers capable of processing the massive data sets used by generative AI (Gen AI) technologies such as OpenAI's ChatGPT, according to a Reuters report.
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Prioritise AI Chip Development
"As a part of aligning our resources with our largest growth opportunities, we are taking a number of targeted steps," an AMD spokesperson was reportedly quoted as saying.
Data Center Growth Surges
AMD's data center segment, which houses its AI graphics processors, saw revenue more than double in the September quarter, while gaming revenue plummeted 69 percent. Analysts expect the data center unit to grow 98 percent in 2024, outpacing AMD's estimated total revenue growth of 13 percent, according to an average of estimates compiled by LSEG, the report said.
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Mass Production of MI325X AI Chip
AMD plans to start mass production of its next-generation AI chip, the MI325X, in Q4 2024, but constrained manufacturing capacity and rising costs remain challenges. Research and development expenses surged 9 percent in Q3, contributing to an 11 percent increase in overall costs.
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Stock Performance Struggles
According to the report, AMD's stock has fallen 3 percent so far this year, as the company struggles to meet investors' high expectations after Wall Street drove a two-fold surge in its shares in 2023. With hyperscalers like Microsoft fueling demand for AI chips, AMD is betting big on this segment to secure its future in the competitive semiconductor market.
