Nvidia Cutting 360 Workers as Competition with Intel, AMD Intensifies

Graphics chip maker Nvidia announced that it will reduce its worldwide work force by more than 6 percent. The job cuts come at a time when Nvidia is struggling financially and is facing increased competition in the graphics chip market from the likes of Intel and AMD.

Nvidia announced Sept. 18 that it will cut 360 employees from its worldwide work force as the graphics maker is facing increasing competition from Advanced Micro Devices and Intel.

In a statement, Nvidia announced that it will eliminate about 6.5 percent of its work force by the end of October. The company then plans to take a restructuring charge of between $7 and $10 million related to the cuts when it reports its third-quarter financial results in a few weeks.

While Nvidia is still considered one the leading producers of GPUs (graphics processor units) and chip sets for desktop and notebooks, as well as high-end discrete graphics for gaming PCs, the company is facing increased competition from AMD and Intel.

In August, AMD released a highly touted discrete graphics card called the AMD ATI Radeon HD 4870 X2, which can deliver up to 2.4 teraflops, or 2.4 trillion calculations per second, of performance. The release of this discrete graphics card showed that AMD was still looking to make waves in the graphics market and would compete against Nvidia when it comes to high-end desktops.

Earlier this week, AMD also began an advertising campaign called "Fusion," which will highlight the company's ability to blend graphics with traditional processor technology.

Intel is also looking to make a difference in the graphics market.

Earlier this year, Intel began describing plans for its "Larrabee" processor, which will use more traditional x86 processing cores. Intel is hoping that will make it easier for developers to write applications based on the architecture. Intel is not expected to release the chip until 2009 or 2010, but it shows that the company is serious about entering the market where it has been weak and competing directly with Nvidia and AMD.

Nvidia has been struggling as of late financially as well. According to financial Web site Market Watch, Nvidia's stock has dropped about 65 percent since January. The company also had to take a charge of about $150 million earlier this year to replace faulty graphics chips that it shipped to OEMs.

"Despite our reduction, we will continue to invest in selective high-growth opportunities like our revolutionary CUDA parallel computing technology and our Tegra mobile single-chip computer," Jen-Hsun Huang, president and CEO of Nvidia, wrote in statement.

Nvidia has also been making significant investments in high-performance computing. In addition to CUDA, a programming language that allows developers to program a GPU like a CPU, the company also released its Tesla 10 series chip, which uses 240 graphics processing cores and can offer up to 1 teraflop of performance.

Nvidia's announcement of the cuts comes the same week Hewlett-Packard announced it will eliminate some 24,000 workers who were part of Electronic Data Systems. HP bought the IT services provider earlier this year for $13.9 billion.