Technology
Wednesday, November 13th, 2024 6:19 pm EDT
Key Points
- Workforce Reduction for AI Focus: AMD announced a 4% global workforce reduction to redirect resources toward growth in the artificial intelligence (AI) chip market, where it faces strong competition from Nvidia.
- Expansion into AI Hardware: AMD produces AI accelerators like the MI300X, targeting large-scale clients such as Meta and Microsoft. The company expects $5 billion in AI chip sales for 2024, a smaller but growing part of its revenue compared to Nvidia, which leads the market with over 80% share.
- Challenges in Gaming and Server CPU Gains: While AMD’s gaming segment is projected to decline by 59% this year, its server CPU business is gaining traction, increasing its market share to 34%, as it continues to compete with Intel.
AMD announced it will reduce its workforce by 4% as it shifts resources to expand in the artificial intelligence (AI) chip market, aiming to challenge Nvidia’s dominance. The decision, which affects approximately 1,040 employees out of its 26,000-strong global team, is part of a strategy to focus on high-growth areas. AMD, currently the second-largest GPU manufacturer after Nvidia, sees AI as a significant opportunity and is determined to establish a stronger position in the field. Although AMD’s stock has dropped by 5% this year, Nvidia’s has surged by 200%, reflecting Nvidia’s commanding market share in AI chips, where it holds over 80% of the market. This is largely due to Nvidia’s development of core software widely used in AI applications, including the infrastructure for tools like OpenAI’s ChatGPT.
AMD’s recent developments in AI hardware include the MI300X accelerator, which has been adopted by major companies such as Meta and Microsoft as an alternative to Nvidia products. AMD forecasts $5 billion in AI chip sales for 2024, representing a substantial portion of its expected $25.7 billion in total sales for the year. However, this figure is modest compared to Nvidia’s projected $125.9 billion in revenue. AMD remains optimistic, estimating the AI chip market could reach $500 billion by 2028.
The company faces challenges in other segments, particularly in gaming GPUs, which were initially AMD’s core product for graphics processing. Gaming sales for AMD are expected to decline by 59% this year to $2.57 billion. AMD also produces CPUs for laptops, desktops, and servers, competing against Intel in this space. It has made gains in the server CPU market, with its share rising to 34% in the third quarter of 2024, marking a nearly 3% annual increase. The layoff announcement underscores AMD’s commitment to the AI sector, as it refocuses resources from underperforming areas to maximize growth in emerging markets.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/11/13/amd-layoffs-company-to-4percent-of-workforce-or-about-1000-employees-.html
