AMD said on Wednesday that it will lay off 4% of its global staff as the longtime computer chipmaker seeks to gain a stronger foothold in the growing artificial intelligence chip space dominated by Nvidia.
"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 by approximately 4%," an AMD representative said in a statement. "We are committed to treating impacted employees with respect and helping them through this transition."
AMD had 26,000 employees at the end of last year, according to a U.S. Securities and Exchange Commission filing.
AMD is the second-biggest producer of graphics processing units, or GPUs, behind Nvidia. The company has said AI represents one of its largest growth opportunities. AMD stock is down 5% in 2024 while Nvidia shares are up 200%, making it the most valuable publicly traded company in the world.
AMD produces powerful AI accelerators for data centers, including the MI300X, which companies such as Meta and Microsoft purchase as an alternative to Nvidia-based systems. But Nvidia dominates the market for powerful AI chips, with over 80% market share, partially because it developed the core software that AI engineers use to develop programs such as OpenAI's ChatGPT.
AMD said in October it expects $5 billion in AI chip sales this year, about a fifth of the $25.7 billion in total sales FactSet projects for AMD's 2024. AMD believes the total market for AI chips will be $500 billion by 2028, but its total sales are currently dwarfed by Nvidia, which FactSet expects to post $125.9 billion in revenue for calendar year 2024.
GPUs were originally developed for gaming, which is lagging at AMD. AMD's gaming segment is expected to decline 59% in 2024 to $2.57 billion in revenue, according to FactSet.
AMD also makes processor chips for laptops, desktops and servers, competing primarily with Intel. Its share of server CPU sales rose nearly 3% on an annual basis in the third quarter to 34%, according to Mercury Research.
