AMD to cut workforce by 4% amid market pressures

Chip maker AMD is set to lay off about 1,000 employees, constituting roughly 4% of its workforce, as part of its strategy to align resources with key growth areas, particularly in the competitive AI chip market. This announcement comes after a significant decline in its gaming division, which has witnessed a staggering 69% drop. In 2023, AMD reported having around 26,000 employees, and this latest move could potentially save the company $200 million.

AMD is set to lay off about 1,000 employees

An AMD spokesperson noted, “As a part of aligning our resources with our largest growth opportunities, we are taking a number of targeted steps that will unfortunately result in reducing our global workforce.” The company is positioning itself to better compete with rivals, particularly Nvidia, which remains the dominant player in the AI chip market with an impressive market share.

Despite the layoffs, AMD has been rolling out new products, including the Ryzen 7 9800X3D and the Ryzen 9 9900X, although projections indicate they will ship only about 220,000 chips this year. In comparison, Nvidia’s GPUs hold a whopping 88% market share, leaving AMD with just 12%. Nevertheless, AMD has made headway against Intel, increasing its desktop CPU shipments by 10 percentage points within a year.

AMD’s recent layoffs come despite the company forecasting $5 billion in AI chip sales for 2024 (Image credit) Market dynamics: AMD’s challenges and opportunities

AMD’s struggles are further underscored by its performance in the gaming segment, which is anticipated to decline by 59% to $2.57 billion in revenue by the end of 2024. The company is not alone, though, as Intel, Dell, and Samsung have recently announced similar workforce reductions in an effort to strengthen their positions in the evolving AI landscape. With the AI market projected to grow significantly, AMD recognizes that streamlining its workforce is crucial to capitalize on emerging opportunities.

AMD’s recent layoffs come despite the company forecasting $5 billion in AI chip sales for 2024, a figure that represents about 20% of its total projected sales of $25.7 billion. While AMD hopes to tap into a total market for AI chips estimated at $500 billion by 2028, it must grapple with the reality that Nvidia is forecasted to amass $125.9 billion in revenue over the same period. This stark contrast illustrates the uphill battle AMD faces in capturing market share from its more established competitor.

The looming layoffs and AMD’s strategic shift reveal broader challenges facing the semiconductor industry, where companies are increasingly compelled to refine their focus amid fluctuating market dynamics. The recent news sheds light on the ongoing pressures faced by manufacturers as they strive to navigate a rapidly evolving technological landscape.

For now, AMD’s journey toward regaining competitive footing continues, as it seeks to adapt to market needs while providing support to those affected by the layoffs. AMD’s commitment to treating impacted employees with respect and assisting them through the transition speaks to a larger corporate responsibility that is often overlooked in the pursuit of profits.

Featured image credit: AMD