About 1,000 workers, or 4% of Advanced Micro Devices' global staff, will be laid off as the company focuses on creating AI chips to take on market leader Nvidia.

In the lucrative market for CPUs that serve as the brains of sophisticated data centers and are capable of processing the massive amounts of data required by generative AI technologies such as OpenAI's ChatGPT, AMD is thought to be Nvidia's closest competitor.

"We are taking a number of targeted steps as part of aligning our resources with our largest growth opportunities," an AMD representative added.

In the September quarter, AMD's data center segment—which contains its AI graphics processors—saw a more than twofold increase in revenue.However, the gaming division saw a roughly 69% decline in sales during that time, while the personal computer segment saw a 29% increase.

According to an average of estimations compiled by LSEG, analysts predict that the data center unit would rise 98% in 2024, surpassing the projected 13% growth in total revenue.

The business has been making significant investments to create AI chips, which are highly sought after by so-called hyperscalers like Microsoft and have high selling prices.

The fourth quarter of this year is when AMD intends to begin mass manufacturing the MI325X, a new iteration of its artificial intelligence processor. Due to limited manufacturing capacity, increasing the manufacture of AI chips is a costly endeavor.

In the third quarter, the company's overall cost of sales increased by 11%, but its R&D expenses increased by nearly 9%.

Since Wall Street drove a double spike in AMD's shares last year, betting on the rewards associated with AI technology, the company has struggled to live up to investors' high expectations, and its shares have fallen more than 3% so far this year.