The semiconductor industry is facing a significant shift in its supply and demand dynamics, creating a crisis that has persisted since the second quarter of 2022. The market is grappling with full inventory, declining prices, and sluggish demand. However, amidst this challenging situation, there is a glimmer of hope for the industry, thanks to the rapid growth of the artificial intelligence (AI) sector.

GPUs are playing a massive role in helping the advancement of AI Technologies

According to a report by IT Home on July 3, the demand for chips in the AI field is on the rise. Companies like Nvidia, Broadcom, and AMD have recognized this trend and are actively investing in Taiwan Semiconductor Manufacturing Company (TSMC). Furthermore, the demand for 3nm chips from Apple‘s iPhone and Mac is expected to contribute significantly to TSMC’s revenue recovery in the latter half of the year.

TSMC

Driven by the escalating demand in the AI sector, these three major companies have been steadily increasing their orders of TSMC’s 5/7nm chips quarter after quarter since the second quarter. Moreover, they are fiercely competing for TSMC’s CoWoS (Chip-on-Wafer-on-Substrate) production capacity, resulting in a more than 20% increase.

Industry insiders have acknowledged that the primary growth driver for these major manufacturers lies in the surge of AI demand. Notably, Nvidia anticipates a staggering 50% increase in revenue for the latest quarter (May to July), reaching an impressive $11 billion. This growth is primarily propelled by the surge in shipments of AI graphics processing units (GPUs). (For reference, $11 billion is approximately equivalent to 79.86 billion yuan.)

As companies continue to invest in cutting-edge technologies and tap into the potential of AI, the future of the semiconductor industry appears to be intertwined with the advancements and breakthroughs in artificial intelligence, which is somehow not surprising at all.

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