Advanced Micro Devices (AMD) has confirmed plans to lay off approximately 1,000 employees, representing 4% of its global workforce. This decision comes as the company seeks to realign its resources towards the rapidly growing artificial intelligence (AI) chip market, where it faces stiff competition from Nvidia.
Key Takeaways
AMD is laying off about 1,000 employees, or 4% of its workforce.
The layoffs are part of a strategic shift to focus on AI chip development.
AMD's gaming division has seen a significant revenue decline of 69% year-on-year.
The company aims to capture a share of the projected $500 billion AI chip market by 2028.
Strategic Shift Towards AI
AMD's decision to reduce its workforce is primarily driven by the need to focus on high-growth opportunities in the AI sector. The company has stated that aligning resources with its largest growth opportunities necessitates these targeted layoffs. AMD's spokesperson emphasised the commitment to treating affected employees with respect and providing support during this transition.
The AI chip market is currently dominated by Nvidia, which holds an impressive 80% market share. AMD aims to strengthen its position in this competitive landscape, particularly with its MI300X AI accelerator, which is already being adopted by major clients like Meta and Microsoft.
Financial Performance Overview
Despite reporting strong overall revenue growth, AMD's gaming division has faced significant challenges. Key financial highlights include:
Total Revenue: $6.8 billion in Q3 2024, an 18% increase year-on-year.
Gaming Revenue: A staggering 69% decline, dropping to $462 million.
AI Chip Sales Projection: Expected to reach $5 billion in 2024, constituting about 20% of total projected revenue.
Market Dynamics and Future Outlook
AMD's gaming segment, which has historically been a major revenue driver, is projected to decline further, with estimates suggesting a 59% drop in revenue for 2024. This decline is attributed to reduced demand for gaming GPUs and custom chips for consoles like the PlayStation 5 and Xbox Series X.
In contrast, AMD's data centre segment is experiencing robust growth, with revenue more than doubling in the last quarter. Analysts predict a 98% growth in this segment for 2024, highlighting the company's pivot towards AI and data centre technologies as a critical component of its future strategy.
Conclusion
The layoffs at AMD reflect a broader trend within the tech industry, where companies are increasingly prioritising AI development over traditional segments. As AMD navigates this transition, its ability to capture a larger share of the AI chip market will be crucial for its long-term success. The company remains optimistic about its future prospects, particularly in the AI sector, as it seeks to realign its workforce and resources accordingly.
Sources
AMD plans to reduce nearly 4% of workforce to target growth opportunities, MSN.
AMD Cutting About 4% of Workforce to Focus Resources on AI Push - Bloomberg, Bloomberg.com.
AMD lays off 4% of its workforce | TechCrunch, TechCrunch.
AMD to lay off 4% of its workforce as part of AI realignment, Yahoo Finance.
