AI is especially resource-intensive and requires a lot of data and processing power to create new content. Processing semiconductors naturally seems to be the main beneficiary of AI, but large language models (LLMs) also require sufficient memory capacity and bandwidth. Memory, computing, and storage semiconductors account for the majority of semiconductor sales. Memory ("DRAM") and memory ("NAND flash") chips are primarily used to store data and instructions, while processing chips (such as the core "CPU" in a computer or supplemental accelerator chips (such as the "GPU") are used to store data and instructions. Used to perform calculations and process data in real time. (Xintuan.com, the world's leading pure third-party trading platform for chip components, shopping around in one minute, quality assurance, high compensation for breach of contract)
According to data released by Barclays, the memory semiconductor market has grown at a CAGR of 10% over the past 10 years and accounted for 26% of semiconductor revenue, and the market is expanding due to the increasing use of smartphones, increasing digitalization, and increasing use of semiconductors in many industries, including the automotive and information technology industries. The logic processor market accounts for 42% of semiconductor revenue, and continues to grow as technological advancements drive increased productivity, reduced power consumption, reliability, and quality.
AI is both a new application brought about by improvements in logic processors and a driver of incremental demand for servers that process AI algorithms and end devices that interact with AI models. Such devices can range from traditional desktop computers or smartphones to embedded devices such as robotic arms or self-driving cars.
In the long run, semiconductor companies benefit from increased consolidation. This trend is driven by a number of factors, including: economies of scale and pooling of resources to address rising costs of resource-intensive R&D, design, and manufacturing, the huge need for greater connectivity (e.g., 5G, IoT), securing supply chains, expanding product portfolios beyond microchips (e.g., software products), growing demand for custom chips and foundries, access to highly specialized talent, and demand for cloud and data center management technologies.
AI has increased the need for faster and more efficient computing. It drives the development of cutting-edge technologies and associated production and design capabilities, while creating higher barriers to entry.
Semiconductor equipment manufacturers and software companies that support semiconductor manufacturing should also benefit from the rise of artificial intelligence.
The AI trend is also driving the demand for semiconductor equipment companies. They offer chip-making systems that produce smaller, faster, cheaper, more powerful, and energy-efficient microchips. For example, the major suppliers of lithography equipment to the global semiconductor industry play a vital role in semiconductor chip manufacturing.
In terms of share of global manufacturing, semiconductors are the most important sector. As a key component of modern computing, semiconductors have been the subject of intense geopolitical competition due to the complexity of their supply chains. According to the data released by Barclays, Taiwan and South Korea are the only cutting-edge chip suppliers, supplying 90% and 10% of the most advanced semiconductors, respectively. The U.S. maintains a technological edge in chip design, while China remains critical in terms of supply chain (38% semiconductor assembly, packaging, and testing).
Governments and industry stakeholders around the world are making huge efforts to strengthen their position in global supply chains through subsidies.
Finally, the mismatch between semiconductor supply and demand creates production challenges for various industries, with about 75% of the shortage driving demand involving integrated circuits and discrete semiconductors. Forward-thinking companies are using AI to increase supply chain dependence, which gives them near real-time visibility into pricing and demand fluctuations. (Xintuan.com, the world's leading pure third-party trading platform for chip components, shopping around in one minute, quality assurance, high compensation for breach of contract)