(Reuters) – Advanced Micro Devices is laying off 4% of its global workforce, or about 1,000 employees, as it focuses on developing AI chips in a bid to compete with industry leader Nvidia.
AMD is considered Nvidia’s biggest competitor in the lucrative market for chips that power complex data centers that can handle the large amounts of data used by generative AI technology such as OpenAI’s ChatGPT.
“As part of aligning our resources with our greatest growth opportunities, we are taking a number of targeted steps,” an AMD spokesperson told Reuters on Tuesday.
Revenue in 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 by 29%, while revenue in the gaming unit fell by around 69% during the period.
Analysts expect the data center unit to grow 98% by 2024, ahead of the projected 13% overall revenue growth, according to an average of LSEG estimates.
The company has invested heavily in developing AI chips that require high retail prices and are in high demand by so-called hyperscalers such as Microsoft.
AMD plans to begin mass production of a new version of its artificial intelligence chip, the MI325X, in the fourth quarter of the year. Ramping up production of AI chips is an expensive undertaking due to limited production capacity.
The company’s research and development costs rose nearly 9% in the third quarter, while total cost of sales rose 11%.
Shares of AMD are down more than 3% so far this year as the company struggles to meet high investor expectations after Wall Street delivered a double-digit rise in its shares last year, betting on the returns associated with AI technology.
(Reporting by Arsheeya Bajwa in Bengaluru and Max Cherney in San Francisco; Editing by Maju Samuel)
