AMD will cut 4% of its workforce to strengthen its market position in the artificial intelligence chip sector

AMD announced on Wednesday that it will cut 4% of its global workforce in a bid to strengthen its market position in the artificial intelligence chip sector, which is currently dominated by NVIDIA. It is still unclear which departments will be affected. According to filings with the U.S. Securities and Exchange Commission (SEC), AMD had 26,000 employees at the end of last year. The 4% reduction is approximately 1,000 people. A representative from AMD stated in a release: To align our resources with the greatest growth opportunities, we are taking a series of targeted actions that will result in a reduction of approximately 4% of our global workforce. We are committed to treating affected employees with respect and helping them through this transition. AMD stated that artificial intelligence is one of its biggest growth opportunities. AMD produces powerful AI accelerator chips for data centers, including the MI300X, which some companies like Meta and Microsoft are using as alternatives to NVIDIA systems. Currently, NVIDIA dominates the AI chip market with over 80% market share, partly due to its development of core software for AI engineers to build programs like OpenAI's ChatGPT. AMD is the second-largest GPU manufacturer globally, behind NVIDIA. However, based on stock performance this year, AMD has significantly lagged behind NVIDIA. AMD's stock has fallen about 5% year-to-date, while NVIDIA's stock has surged 200%, surpassing giants like Apple and Microsoft to become the world's most valuable publicly traded company. AMD previously released a mixed earnings report, showing growth in both revenue and profit, but its gaming division's performance declined by 69% year-on-year. In October, AMD projected that AI chip sales would reach $5 billion this year, with the total AI chip market expected to reach $500 billion by 2028. GPUs were originally developed for gaming, and AMD has been relatively slow in the gaming sector. According to FactSet forecasts, AMD's gaming business revenue is expected to decline by 59% in 2024, to $2.57 billion. AMD also produces processor chips for laptops, desktops, and servers, with Intel as its main competitor. Market estimates indicate that AMD's server CPU market share rose nearly 3% year-on-year in the third quarter, reaching 34%