AMD confirmed to Fierce Electronics that it is cutting about 4% of its workforce after numerous reports this week suggested job cuts were occurring as the company looks to better position itself in the AI chips race. The cuts represent around 1,000 jobs.
An AMD spokesman stated via e-mail, “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%. We are committed to treating impacted employees with respect and helping them through this transition.”
The move comes after a solid third quarter AMD earnings posting last month that showed evidence of great success with AI chip sales, though Wall Street was looking for a more robust outlook from the company. After the layoff report, a variety of industry observers suggested AMD may be cutting costs on some non-AI areas where it has been seeing softer revenue performance recently.
Jack Gold, president and principal analyst at J. Gold Associates, told Fierce Electronics, “I think this does reflect the need for AMD to concentrate its resources to its highest growth and largest profit products. I doubt there are layoffs coming in the AI segments they serve. It’s more likely they are cutting some of the peripheral areas they are in. AMD is in a lot of businesses that are left over from the past. They do a lot of custom designs (especially for the games industry), and have other areas where the market is probably soft and certainly not growing as fast as AI. So I’d read this more as an adjustment to get rid of some marginal business areas so it can concentrate on the high value AI space. And of course, it won’t hurt their bottom line either so Wall Street should be pleased.”
One of the challenging segments for AMD could be FPGAs, a market with a strong long-term outlook and growing interest, especially in the low-power end of the market, but one with a less predictable short-term future as Intel spins off its Altera unit, and as there has been some sluggish activity among buyers in automotive and some industrial segments (most recently evident in Lattice Semiconductor’s move to cut jobs) .
“There are a lot of chip companies cutting costs because of certain soft demand issues, like in some server areas, networking, and even in some PC spaces – all of which AMD plays in," Gold said. “FPGAs are not a great business right now – look at Lattice. And AMD is also in that space so I wonder if that’s part of their thinking around the layoffs.”