Advanced Micro Devices (AMD) has announced it will lay off 4% of its global workforce, translating to approximately 1,000 employees. This decision is part of a strategic realignment aimed at boosting its efforts in developing artificial intelligence (AI)-focused chips, specifically targeting competition against Nvidia.
An AMD spokesperson explained the layoffs as a necessary adjustment to align resources with significant growth opportunities. While the company has committed to treating affected employees with respect and assisting them through this transition, it has yet to specify which departments will see the most significant reductions in staff.
The announcement of these layoffs coincided with AMD’s recent quarterly earnings report, which delivered strong financial results, including an 18% revenue increase to $6.8 billion. However, amidst this apparent success, the company also faced challenges, such as a 69% drop in gaming chip revenue and a 25% decrease in embedded chip sales year-over-year.
During the earnings call, AMD CEO Lisa Su emphasized the importance of the data center and AI sectors for the company’s future, forecasting an impressive 98% growth in these segments for 2024. The positive revenue performance was attributed to orders from major clients such as Microsoft and Meta, with the latter beginning to use AMD’s MI300X GPUs for internal workloads.
In contrast to AMD’s targeted job cuts, its competitor Intel has made more extensive layoffs recently, cutting around 15,000 positions as part of broader restructuring efforts.
AMD’s commitment to AI has been underscored by multiple initiatives, such as optimizing its Instinct GPUs to cater to AI workloads. Their focus on data center reliability has enabled a revised sales forecast for the company’s Instinct AI products, projecting a $500 million increase for 2024. Notably, Microsoft and Meta have expanded their adoption of AMD’s MI300X GPUs, reinforcing AMD’s growing presence in the AI sector.
The company’s research and development expenditure has increased by nearly 9% in Q3, aimed at scaling the production of its new MI325X AI chips, expected to launch later this year. Additionally, AMD has introduced open-source large language models under the OLMo brand to enhance its competitive position against leaders like Nvidia, Intel, and Qualcomm in the AI market.
AMD’s strategic pivot and reallocation of resources suggest its intent to solidify its position in the highly competitive AI chip arena, as it directly challenges Nvidia in providing advanced components for data centers that cater to the rising demands of generative AI technologies.