Advanced Micro Devices is laying off four percent of its global workforce, or about 1,000 employees, as it directs efforts toward developing AI chips to compete against industry giant Nvidia.
AMD is considered Nvidia’s closest rival in the lucrative market of chips that form the brain of complex data centers that can process huge piles 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 several targeted steps,” an AMD spokesperson told Reuters on Tuesday.
Revenue at AMD’s data center segment, which houses its AI graphics processors, grew more than twofold in the September quarter. On the other hand, the personal computer segment grew by 29%, while its gaming unit sales declined by nearly 69% during the period.
According to an average of estimates compiled by LSEG, analysts expect the data center unit to grow 98 percent in 2024, exceeding expected total revenue growth of 13 percent.
The company is investing heavily to develop AI chips, which have high selling prices and are in high demand among so-called hyperscalers like Microsoft.
AMD plans to begin mass production of a new version of its artificial-intelligence chip called MI325X in the fourth quarter of the year. Scaling up production of AI chips is an expensive undertaking due to limited manufacturing capacity.
The company’s research and development costs rose nearly nine percent in the third quarter, while its total cost of sales rose 11 percent.
AMD shares have fallen more than three percent so far this year, as the company struggles to live up to investors’ high expectations from AI technology after Wall Street saw its shares double last year. Betting on linked returns.
© Thomson Reuters 2024
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