AMD Says It’s Laying Off 4 Percent Of Workforce Amid AI Chip Push

‘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 percent,’ an AMD spokesperson says in a statement to CRN.

AMD said it’s laying off roughly 4 percent of its global workforce to focus on its “largest growth opportunities,” which includes its effort to challenge Nvidia’s AI chip dominance.

“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 percent,” an AMD spokesperson said in a statement to CRN.

“We are committed to treating impacted employees with respect and helping them through this transition,” the representative added.

While AMD’s stock price is 3.9 percent higher than it was at the beginning of the year, shares have been down more than 13 percent since the chip designer disclosed in its third-quarter earnings report in late October that its fourth-quarter revenue forecast fell short of expectations.

The AMD spokesperson did not say how many employees would be impacted by the layoffs or how many people it currently employs.

AMD had approximately 26,000 employees as of last year, according to the company’s annual 10-K filing with the U.S. Securities and Exchange Commission from January.

According to LinkedIn data, AMD’s workforce has grown by 24 percent over the past six months and by 33 percent over the past year.

The layoffs were first reported by Wccftech.

Layoffs Hit AMD After Mixed Earnings Report

The layoff announcement comes two weeks after AMD said that it had more than doubled its data center business and increased client processor sales by 29 percent in the third quarter compared to the same period last year.

At the same time, however, AMD’s embedded chip revenue declined 25 percent year-over-year while its gaming chip revenue sank 69 percent in the third quarter.

This resulted in an overall revenue of $6.8 billion for the third quarter, which was 18 percent higher than the same period last year and 17 percent higher sequentially. The company’s gross margin grew 3 points year-over-year to 50 percent and its gross profit increased 24 percent year-over-year to $3.4 million while its earnings per share was up 161 percent to 47 cents.

In its third-quarter report, the company said it expected to make roughly $7.5 billion in revenue for the fourth quarter, which would amount to a roughly 22 percent year-over-year increase and a 10 percent sequential increase.

AMD’s third-quarter revenue beat Wall Street’s expectations by roughly $100 million while its adjusted earnings per share were slightly in line with analyst estimates. Its fourth-quarter revenue forecast fell just short of Wall Street’s expectations, however.

Instinct GPUs, EPYC CPUs Fuel The Most Growth

What allowed AMD’s data center revenue to grow by 122 percent year-over-year to a record $5.3 billion in the third quarter was a “strong ramp” of Instinct GPUs shipments combined with an increase in EPYC CPU sales, according to the company.

On the third-quarter earnings call, AMD CEO Lisa Su said the company was able to upgrade its Instinct GPU 2024 sales forecast by $500 million to $5.5 billion due to the completion of “some important customer milestones” such as meeting reliability requirements in data centers and optimizing the chips on certain AI workloads.

Two major customers that helped fuel sales in the third quarter were Microsoft and Meta, which both expanded their use of AMD’s MI300X GPUs for internal workloads, according to Su.

While Microsoft is using the MI300X to run multiple Copilot services powered by OpenAI’s GPT-4 AI models, Meta has “broadly deployed MI300X to power their inferencing infrastructure at scale, including using MI300X exclusively to serve all live traffic for their most demanding Llama [405-billion-parameter] frontier model,” she said.

The company also saw the availability of MI300X public cloud instances expand among Microsoft, Oracle Cloud and smaller cloud providers while “multiple startups and industry leaders” such as Databricks and Essential AI drove “strong” adoption of such instances.

As for AMD’s EPYC CPU business, Su said the company saw EPYC-based public cloud instances from Microsoft, Amazon Web Services and others increase by 20 percent year-over-year to more than 950 in the third quarter.

These instances were used by a growing number of enterprise customers, including Adobe, Boeing, Micron, Nestle, Slack, Synopsys, Tata and others, according to Su.

As for enterprises using on-premises servers, AMD saw EPYC sales grow by a “strong double-digit percentage” year-over-year for the fifth straight quarter, according to Su. At the same time, Dell Technologies, Hewlett Packard Enterprise, Lenovo and other server vendors expanded the number of platforms supporting fourth-gen EPYC CPUs by 50 percent in the quarter.

“We are building strong momentum with large enterprise customers, highlighted in the third quarter by wins with large technology, energy, financial services, and automotive companies in the quarter, including Airbus, Daimler Truck, FedEx, HSBC, Siemens, Walgreens and others,” Su said on the earnings call.

AI PC Demand Helped AMD Grow Client Sales

In AMD’s traditional client processor business, the company said it saw “strong demand” for its latest desktop and laptop processors based on its Zen 5 architecture.

This included a significant increase in sales of its Ryzen AI 300 processors, which are the company’s first chips expected to support Microsoft’s Copilot+ PC features in next-generation AI PCs that have started to hit the market over the past few months. Microsoft has previously said that it expects to bring Copilot+ PC features to eligible x86-based laptops in November.

Su said AMD also saw desktop channel sales grow by a “significant double-digit percentage,” thanks to the company’s recently released Ryzen 9000 processors.

In addition, the chip designer “made good progress expanding our presence in the commercial PC market in the quarter, closing multiple large deals with Astra Zeneca, Bayer, Mazda, Shell, Volkswagen and other enterprise customers,” according to the CEO.

With AMD’s recently launched Ryzen AI Pro 300 series, Su said the company’s commercial prospects are looking even better, with HP Inc. and Lenovo both on track to “more than triple the number of Ryzen AI Pro platforms they offer in 2024.” The company also expects to “have more than 100 Ryzen AI Pro platforms in the market next year.

The expanding availability of AMD-based commercial PCs positions the company “well for share gains as businesses refresh the hundreds of millions of Windows 10 PCs that will no longer receive Microsoft technical support starting in 2025,” Su added.

Embedded, Gaming Businesses Struggle

What dragged AMD’s embedded business in the third quarter was “ongoing softness in the industrial market,” though Su said demand continues to gradually recover, mainly thanks to companies using its chips for test and emulation purposes.

The company also continues to see momentum for its Versal family of adaptive system-on-chips, with broad adoption happening across multiple aerospace customers, including SpaceX, according to the CEO.

“Design win momentum is very strong across our portfolio, tracking to grow more than 20 percent year-over-year in 2024 and positioning us well to grow our embedded business faster than the overall market in the coming years,” Su said.

As for AMD’s gaming business, the main drag was a decline in semi-custom sales because Microsoft’s and Sony’s latest video game consoles that use AMD chips are now several years into their respective lifecycles, which resulted in lower demand from consumers.

However, Su said Sony plans to release soon the PlayStation 5 Pro, which comes with a new AMD semi-custom system-on-chip “that extends our multi-generational partnership.”

The company’s gaming graphics business also suffered, with revenue declining year-over-year as AMD prepares for a “transition to our next-gen Radeon GPUs” based on its RDNA 4 architecture, according to Su. These GPUs are on track to launch in early 2025.