Focus on AI chips: job cuts at AMD

The US semiconductor company Advanced Micro Devices, or AMD for short, is laying off four percent of its global workforce. This corresponds to around 1,000 employees. The company wants to focus on the development of chips for artificial intelligence (AI) in order to compete with industry leader Nvidia, according to the news agency Reuters.

"We are taking a number of targeted steps as part of aligning our resources with our biggest growth opportunities," said an AMD spokesperson. In other words, people are being laid off. This news comes after a mixed earnings report for the third quarter. Although the company was able to increase sales and profits, especially in AMD's data center segment, where the AI processors are located, the gaming division recorded a 69 percent slump compared to the previous year.

Focus on AI chips

The market for AI chips is highly competitive. The powerful chips can process huge amounts of data and form the heart of generative AI technology such as ChatGPT or DALL-E from OpenAI. Market leader Nividia, now the most valuable company of all time, not least due to the AI boom, is being challenged by companies such as Amazon Web Services (AWS), Intel and AMD.

AMD has invested heavily in the development of AI chips and, according to Reuters, plans to start mass production of a new version of its AI chip called MI325X in the fourth quarter of the year. During a quarterly earnings conference call, AMD CEO Lisa Su told investors that AMD's future chips will be highly competitive with Nvidia's , according to tech portal TechCrunch. "Our next-generation M1350 chip series looks very good and is on track to launch in the second half of 2025 with the biggest boost in AI performance we've ever delivered," she said.

Costs rise – the share price falls

Due to limited manufacturing capacity, expanding the production of AI chips is an expensive undertaking. The company's research and development costs have recently risen, while the share price has fallen by around four percent over the course of the year.

To make up for this, savings are now to be made in the workforce. It is not yet clear how many employees will be affected by this move or which departments the redundant staff will come from. Competitor Intel is also trying to cut costs drastically. The company announced in the summer that it was cutting around 15,000 jobs – around 15 percent of its workforce. AWS, on the other hand, is trying to gain ground on Nvidia by offering free computing power to AI researchers and a conditional billion-euro investment in the AI start-up Anthropic.

(akn)