AMD to cut 4% of its workforce to gain a stronger position in artificial intelligence chips

AMD said on Wednesday it would cut 4% of its global workforce as it seeks a stronger position in artificial intelligence chips, a field currently dominated by Nvidia Corp. It was not immediately clear which divisions would be affected.

AMD had 26,000 employees at the end of last year, according to SEC filings. 4% is roughly equivalent to 1,000 people.

An AMD representative said in a statement:

To align our resources with the greatest growth opportunities, we are taking a series of targeted actions that will result in a global headcount reduction of approximately 4%. We are committed to treating impacted employees with respect and supporting them through this transition.

AMD, which makes powerful AI accelerator chips for data centers, including the MI300X, is marketed by companies such as Meta and Microsoft as an alternative to Nvidia systems, according to the company.

Nvidia currently dominates the AI ​​chip market with a market share of more than 80%, partly because it develops the core software that AI engineers use to build programs like OpenAI's ChatGPT.

AMD is the world's second largest GPU manufacturer after Nvidia. However, judging from its stock price performance this year, AMD is far behind Nvidia. AMD's stock price has fallen by about 5% so far this year, while Nvidia's stock price has risen by 200%, surpassing giants such as Apple and Microsoft to become the world's largest listed company by market value.

AMD previously released mixed financial results. Although its revenue and profits both increased, its gaming division's performance fell 69% year-on-year.

In October, AMD predicted that AI chip sales would reach $5 billion this year, and the total size of the AI ​​chip market would reach $500 billion by 2028.

GPUs were originally developed for gaming, an area where AMD has lagged. AMD’s gaming revenue is expected to fall 59% to $2.57 billion in 2024, according to FactSet forecasts.

AMD also makes processor chips for laptops, desktops and servers, competing against Intel. AMD's market share for server CPUs rose nearly 3% year-on-year in the third quarter to 34%, according to market estimates.