AMD Announces Mass Layoffs Following Unsatisfactory Performance In Q3

Key Takeaways

• An AMD spokesperson confirmed that the company will be laying off 4% of its workforce, which is about 1,000 employees.
• The company said this step will help them align their resources with their largest growth opportunities.
• However, we think that growing competition from its rivals and unsatisfactory performance in Q3 also played a role in this decision.

Popular chipmaker AMD has announced a round of mass layoffs that is expected to affect roughly 1,000 employees, which is approximately 4% of its workforce. Its last estimated headcount was 26,000.

The news of the layoffs first popped up on anonymous message boards, which was later confirmed by an AMD spokesperson.

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%. - AMD Spokesperson

It did not reveal which department will lose the most number of jobs but has promised that all the employees that are affected by this layoff will receive assistance from the company in the form of severance packages and career services to ensure a seamless transition for them.

Cause of the Layoffs

The company didn't talk much about the exact reason behind this decision. As you can see from the statement, it was a bunch of words that didn't really reveal the real deal.

However, we believe that it might have to do something with the mixed earnings of Q3. On the bright side, its revenue and profit grew by 17% and 34% respectively but it still fell short of the estimates.

For instance, estimated revenue as per analysts for this quarter was $7.54 billion whereas the projected revenue was only $7.5 billion. Similarly, its gaming division went down by 69% and its AI unit did not gain as much as its competitor Nvidia did.

On top of that, its stocks fell by 13.6% after the earnings report was revealed. So far this year its stocks have only gone up by 1.5% whereas Nvidia's has gone up by 200% in the same period. Nvidia now has control over 88% of the market whereas AMD only has a 12% share.

It's also facing stiff competition from Intel and there are rumors that two tech giants might be considering a merger. The rumors were further fueled by Intel CEO Pat Gelsinger and AMD CEO Lisa Su making a joint appearance at the Lenovo Tech World in October 2024 to talk about the initiative they are taking to advance the x86 computing ecosystems.

Also, since Intel is also struggling at the moment (even the US government is exploring options to help it) and Nvidia's dominance in the chip industry is growing day by day, it only makes sense for AMD and Intel to join hands in this battle against Nvidia.

But it's important to note this is all just speculation at the moment, neither of the companies have made any official comment.

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