AMD layoffs will affect 4% of its workforce as it shifts focus from gaming to AI and data centers, aiming to challenge NVIDIA’s dominance in the AI chip market. With increasing competition from both NVIDIA and Intel, AMD is betting big on its Instinct MI300X GPUs and upcoming MI350-series. But will this strategic move give AMD the edge it needs, or is it a last-ditch effort to retain its position?
In November 2024, AMD announced job cuts that would slash its workforce by 4%, which means 1000 employees will lose their jobs from its total of 26,000 employees. This strategic move of AMD layoffs aims to focus on high-growth areas like artificial intelligence (AI) to take over Nvidia’s position in the AI chip market which holds more than 80% of the AI GPU market and AMD has been the second-largest.
Tech layoffs in 2025 are already ramping up and now it looks like the trend is here to stay.
Image Caption: AMD’s workforce reduction signals a major shift in strategy, focusing on AI and data center growth.
Understanding the AMD Layoffs
AMD saw a 59% drop in gaming unit sales in Q3 2024, pushing it to focus on AI and data centers to better compete with NVIDIA’s H100 and Blackwell GPUs amidst job cuts. This is not something new. AMD had to lay off workers previously too in 2002, 2008, 2009, and 2011, as part of their efforts to remain competitive.
The layoffs are going to take place mainly in the company’s US offices in the course of the next few months. While the layoff is raising concerns among employees and industry observers about the stability of jobs in the tech sector, AMD is providing severance and career support.
AI Move
AMD has collaborated with other companies to boost its AI technology. Microsoft’s Azure uses AMD’s Instinct MI300X GPUs in their virtual machines known as ND MI300X v5. AMD plans to increase the production of MI325X chips to compete with NVIDIA.
The company’s CEO, Lisa Su, expects to earn $5.5 billion in AI chip sales this year. They are also working to improve its ROCm platform and supporting open-source projects like Tinygrad, which could enhance software compatibility and make AMD’s AI hardware a stronger contender.
Competitive Edge
Nvidia’s dominance lies in hardware, software, and scale. There was a 69% revenue drop in AMD’s gaming segment due to a decrease in console chip sales. Its gaming GPUs (Radeon) have floundered against Nvidia’s RTX lineup, with Steam surveys showing RDNA 3 cards barely registering. As the gaming hardware market is dwindling, AMD is maneuvering its resources to mid-range GPUs and AI-first priorities where it sees its future potential.
AMD is facing competition not only from Nvidia but also from Intel. Intel’s 15,000 job layoffs and pivoting to Gaudi 3, puts AMD in dire straits. Now the question arises as to whether AMD can compete with these giants and gain ground in the AI market.
Image Caption: AMD CEO Lisa Su leads the company through workforce reductions and a strategic shift toward AI dominance.
What’s next for AMD
As per AMD CEO, Lisa Su, the MI350-series which is expected in the second half of 2025 will enhance performance boost in AI. If Tinygrad, AWS, or Google expand the use of AMD’s MI300X GPUs, AMD could gain market share.
Analysts and investors have opined that AMD’s layoffs will hurt the AI market. Immediately after the layoff announcement was met, its stock dropped approximately 2.3%. AMD’s recent layoff might fund R&D or acquisitions like their past strategic purchase of Xilinx (a key FPGA chipmaker). However, investors’ sentiments remain cautious as AMD’s stock fell 5% in 2024, while NVIDIA stock surged 200%. The balance between the performance of the two tech giants, Nvidia and AMD, has been interesting to see.
Final Thoughts on the Future of AMD
AMD’s layoffs and doubling down on data center chips underscores a phenomenal move as it is battling to dethrone Nvidia. The question remains whether the leaner structure of AMD is the correct move to effectively compete in the AI domain or whether it is a desperate gamble to close the gap with NVIDIA and Tesla in the AI race.
Will AMD’s AI-focused strategy give results as planned, or is it just a desperate gamble? Keep abreast of the latest tech industry news by subscribing to Technowize today.