AMD layoffs follow AI job trend

Chipmaker AMD has joined other tech companies in laying off employees as the company pivots toward serving the AI market.

AMD will reduce its workforce by about 4% to align its resources with the “largest growth opportunities,” the company said in a statement. AMD reported having 26,000 employees at the end of last year, so the layoffs amount to roughly 1,000 workers.

AMD’s “growth opportunities” are undoubtedly in AI. The company’s Instinct AI accelerators for the data center and Ryzen processors for AI PCs powered an 18% increase in revenues year over year in the quarter ending Sept. 28.

“We delivered strong third quarter financial results with record revenue led by higher sales of EPYC [CPUs] and Instinct data center products and robust demand for our Ryzen PC processors,” AMD CEO Lisa Su said in a statement.

To keep that momentum, AMD must pivot decisively from legacy technology to AI products and employ a workforce capable of developing them, said Victor Janulaitis, CEO of labor market research firm Janco Associates.

“AI is at the forefront of all new initiatives in corporations, and AMD has not been keeping up with the market,” Janulaitis said. “They have to adjust.”

AMD’s AI strategy goes beyond workforce changes. In August, the company unveiled plans to spend $4.9 billion to acquire ZT Systems, a designer and manufacturer of AI and cloud computing systems for hyperscale data centers. AMD expects to close the deal in the first half of next year.

Nevertheless, the company’s success depends on hiring and retaining AI talent for product development, experts said. In its latest 10-Q filing with the U.S. Securities and Exchange Commission, AMD described competition for people knowledgeable in AI and machine learning as “intense.”

The number of college graduates with AI-related degrees is increasing, but remains insufficient to meet today’s demand. From 2010 to 2022, the number of graduates rose at an annual rate of 5%, according to the Center for Security and Emerging Technology.

“AI workers are not readily available,” Janulaitis said.

About 10% of tech job ads today are for workers with AI skills, up from 6% two years ago, according to the industry trade group CompTIA.

Besides AMD, other companies have laid off workers to pursue those with AI skills. AI-driven workforce changes have contributed to the nearly 147,000 layoffs in the tech industry recorded this year by the site Layoffs.fyi.

In August, Cisco reported plans to cut more than 6,300 jobs, or 7% of its workforce, as part of a restructuring of its business around its fastest-growing markets: AI, cybersecurity and cloud.

AMD’s rival Intel is an example of the consequences of missing out on the red-hot AI market. In August, Intel reported it would reduce its workforce by 15%, or more than 15,000 jobs, by the end of the year. It also plans to cut $10 billion in capital expenditures in 2025.

A large part of Intel’s problems stemmed from its lack of a competitive AI product against AMD and market leader Nvidia in the data center, according to industry experts.

Antone Gonsalves is an editor at large for TechTarget Editorial, reporting on industry trends critical to enterprise tech buyers. He has worked in tech journalism for 25 years and is based in San Francisco. Have a news tip? Please drop him an email.