Chipmaker AMD cutting 1000 jobs to focus on AI development

Chipmaker AMD is laying off 1,000 employees to prioritise AI chip development, signalling a strategic shift in response to the growing importance of AI technology and competition from Nvidia.

AMD, one of the world's biggest computer chip makers, is letting go of 1,000 workers – about 4 per cent of all its employees – as it shifts its focus to making chips for artificial intelligence (AI). This move shows how important AI has become in the tech world, especially after the success of tools like ChatGPT. Why is AMD doing this? The simple answer is money and competition. The company is trying to catch up with its main rival, Nvidia, which is currently dominating the market for AI chips. These special chips are very expensive and in high demand because they power the massive data centers that run AI systems.

The numbers tell an interesting story. As per Reuters report, AMD's data center business, which includes AI chips, has been doing really well – its revenue more than doubled in recent months. However, other parts of the business aren't doing as great. While their personal computer chip sales grew by 29 per cent, their gaming division saw a huge drop of 69 per cent

Looking ahead, market experts think AMD's data center business will grow by 98 per cent in 2024, which is much faster than the company's overall expected growth of 13 per cent. This explains why AMD wants to put more resources into AI chip development.

But developing and making AI chips isn't cheap. AMD's research costs went up by 9 per cent, and their production costs increased by 11 per cent. Making these advanced chips is expensive because there aren't enough facilities to make them, and the technology is complex.

AMD is planning to start making a new AI chip called the MI325X later this year. Big tech companies like Microsoft are eager to buy these kinds of chips for their data centers.
Despite all these plans, AMD's stock price has actually dropped by more than 3% this year. This is happening even though their stock value doubled last year when investors were extremely excited about AI technology.

The job cuts, while difficult for the affected employees, show how AMD is trying to adapt to changes in the tech industry. They're betting big on AI being the future and are willing to make tough decisions to stay competitive. It's a clear sign that the computer chip industry is changing, with AI becoming more important than traditional computing needs.

This move is basically AMD saying, "We need to focus our money and people on what we think will make us successful in the future – and right now, that's AI chips."