Technical News Office,AMD, one of the world’s largest chipmakers, recently said goodbye to 1,000 of its employees, or about 4% of the company’s total employees. The company made this decision due to its focus on AI chips. This milestone shows how much the importance of AI has increased in the tech world, especially after the success of tools like ChatGPT, news of layoffs is being heard everywhere.
Why did the company take such a big step?
Why did the company take such a big step? So the direct answer is competition and profit. The company wants to get ahead of its competitor Nvidia, which currently dominates the AI chip market. Nvidia shares have also seen a considerable rise of late. Let us tell you that special AI chips are very expensive and their demand is growing rapidly for large data centers that power AI systems. According to a recent Reuters report, AMD’s data center in which AI chips comprise, is growing rapidly. Its revenues have also more than doubled in recent months. However, AMD’s other businesses aren’t performing as well. While sales of chips for personal computers increased by 29 percent, the gaming division saw a decline of 69 percent.
Is it right to focus on AI chips?
It seems that AMD’s decision to invest more resources into AI chips is the right one. Market experts estimate that AMD’s data center capacity could increase by 98% in 2024, while the company’s overall growth is expected to reach 13%. However, preparing AI chips is not that simple. As a result, AMD’s research costs increased by 9% and production costs by 11%. The production of these chips requires significant investments while the facilities to manufacture them are limited.
Stocks fell more than 3%
AMD plans to produce a new AI chip named MI325X by the end of this year. Major tech giants like Microsoft are looking for similar AI chips for their data centers. Despite all these efforts, this year AMD shares have seen a decline of more than 3%, while last year the company’s shares doubled and rose quite quickly.
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