Chip giants also wielded the axe on layoffs! AMD (AMD.US) will lay off 4% of its global workforce, affecting about 1,000 employees

Market IntelWednesday, Nov 13, 2024 10:50 pm ET

1min read

Old-line computer chip maker AMD (AMD.US) said on Wednesday it would cut 4% of its global workforce. The move will affect about 1,000 of the company's 26,000 employees as of the end of last year, according to a Securities and Exchange Commission filing. "As part of aligning our resources with our largest growth opportunities, we are taking some targeted steps, unfortunately, that will result in a global workforce reduction of approximately 4%, a representative said in a statement. "The company is committed to treating the affected employees with respect and helping them through the transition."

AMD is the No. 2 graphics processor maker, behind Nvidia, and has been seeking a stronger foothold in the growing field of artificial intelligence chips, which Nvidia dominates. The company said AI is one of its biggest growth opportunities. AMD's stock has fallen 5% in 2024, while Nvidia's stock has risen 200% and vaulted to the world's largest publicly traded company.

AMD produces powerful artificial intelligence accelerators for data centers, which Meta and Microsoft have bought as alternatives to Nvidia systems. But Nvidia still dominates the powerful AI chip market, with a share of more than 80%, in part because it developed the core software used by AI engineers to develop programs such as ChatGPT.

AMD said in October it expects its AI chip sales this year to reach $5 billion, about one-fifth of the $25.7 billion in total sales Factset expects AMD to reach in 2024. AMD believes the total market for AI chips will reach $500 billion by 2028, but its total sales are dwarfed by Nvidia's. Factset expects Nvidia to generate $125.9 billion in revenue in 2024.

GPUs were originally developed for gaming, and AMD is lagging in that area. Factset data shows AMD's gaming business revenue is expected to fall 59% to $2.57 billion in 2024.

AMD also produces processor chips for laptops, desktops and servers, mainly competing with Intel. Intel's share of server CPU sales rose nearly 3% year over year to 34% in the third quarter, according to Mercury Research.

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