The company had 26,000 employees as of the end of last year. Credit: JHVEPhoto/Shutterstock.

Advanced Micro Devices (AMD) plans to reduce its global workforce by 4% as it aims to strengthen its position in the AI chip market, reported Reuters.   

This move, which is expected to impact around 1,000 employees, comes as AMD seeks to compete more effectively with NVIDIA, a dominant player in AI chip technology.  

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According to a US Securities and Exchange Commission filing, the company had 26,000 employees as of the end of last year. 

AMD is recognised as a key competitor of Nvidia in the market for chips that power complex data centres.  

These chips are essential for processing the vast amounts of data required by generative AI technologies such as OpenAI’s ChatGPT.  

An AMD representative, as reported by CNBC, said: ″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%.”  

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AMD produces AI accelerators for data centres, such as the MI300X, which are used by companies including Meta and Microsoft. 

Despite AMD’s efforts, Nvidia holds more than an 80% market share in AI chips, partly due to its development of core software used by AI engineers.  

AMD expects $5bn in AI chip sales this year and anticipates the total AI chip market to reach $500bn by 2028.  

Revenue in AMD’s data centre segment more than doubled in the September 2024 quarter, while its personal computer segment grew by 29%.  

However, sales in its gaming unit declined by about 69% during the same period. 

AMD plans to begin mass production of its new AI chip, the MI325X, in the fourth quarter of the year.  

The Instinct MI325X is part of AMD’s latest accelerator series, promising advancements over Nvidia’s H200.  

These include 1.8-times the capacity and 1.3-times the bandwidth, along with enhanced compute capabilities. 

Ramping up AI chip production is costly due to limited manufacturing capacity.