AMD, one of the world’s largest computer chip makers, is laying off 1,000 workers – about 4 percent of all its employees – as it shifts its focus to making chips for artificial intelligence (AI) . The move shows how important AI has become in the tech world, especially after the success of tools like ChatGPT. Why is AMD doing this? The simple answer is money and competition. The company is trying to catch up to its main rival Nvidia, which currently dominates the market for AI chips. These specialized chips are very expensive and in high demand because they power the huge data centers that run AI systems.

The numbers tell an interesting story. AMD’s data center business, which includes AI chips, is performing really well — its revenue has more than doubled in recent months, Reuters reports. However, other parts of the business are not performing as well. While their personal computer chip sales grew by 29 percent, their gaming division saw a massive decline of 69 percent

Looking ahead, market experts believe AMD’s data center business will grow 98 percent in 2024, much faster than the company’s overall expected growth of 13 percent. This explains why AMD wants to put more resources into AI chip development.

But developing and making AI chips isn’t cheap. AMD’s research costs increased by 9 percent, and their production costs increased by 11 percent. These advanced chips are expensive to make because there are not enough facilities to make them and the technology is complex.

AMD plans to start making a new AI chip called the MI325X later this year. Big tech companies like Microsoft are eager to buy these types of chips for their data centers.
Despite all these plans, AMD’s share price has fallen more than 3% this year. This comes as their stock doubled in value last year when investors were extremely bullish on AI technology.

The job cuts, although difficult for the affected employees, show how AMD is trying to adapt to changes in the tech industry. They are betting big on the future of AI and are willing to make tough decisions to remain competitive. This is a clear sign that the computer chip industry is changing, with AI becoming more important than traditional computing needs.

This move is basically AMD saying, “We need to focus our money and people on what we think will make us successful in the future – and right now, that’s AI chips.”