How AI is Shaping the Future of Semiconductors

When global semiconductor manufacturer NVIDIA revealed in February that its year-over-year sales had increased by 265%, the industry sat up and listened. After experiencing some significant shortages and extended lead times during the pandemic, it looked like the semiconductor industry was not only “righting” itself—it was booming.

For fiscal 2024, NVIDIA’s revenues increased by 126% to $60.9 billion. “Accelerated computing and generative AI have hit the tipping point,” said Jensen Huang, the company’s founder and CEO, in a press release. “Demand is surging worldwide across companies, industries and nations.”

“Our data center platform is powered by increasingly diverse drivers—demand for data processing, training and inference from large cloud-service providers and GPU-specialized ones, as well as from enterprise software and consumer internet companies,” Huang continued. “Vertical industries—led by auto, financial services and healthcare—are now at a multibillion-dollar level.”

The Silicon Revolution 2.0

According to CNBC, NVIDIA has been the “primary beneficiary” of the recent technology industry obsession with large AI models, which are developed on the company’s graphics processors for servers. NVIDIA’s “Hopper” chips are in particularly high demand right now.

These H100 and GH200 chips are graphics processing units (GPUs) and accelerated computing processing units (ACUs) that are designed for datacenter use.

According to electronic component distributor WIN SOURCE, NVIDIA’s year-over-year growth was a pleasantly surprising “report card” that dispelled market doubts. The uptick was largely driven by robust growth of AI models and OpenAI’s Sora, the latter of which is an AI model that can create realistic scenes from text instructions.

“At the close of 2022, amid the emergence of ChatGPT, major players eagerly joined the AI model entrepreneurship wave—right down to small firm entrepreneurs—akin to a gold rush, with NVIDIA being the ‘shovel seller,’” WIN SOURCE says. “NVIDIA’s significant growth indeed stems from this wave of AI breakthroughs and demand, driving continued investment in infrastructure.”

The distributor says electronics buyers should leverage NVIDIA’s recent earnings report to “thoroughly grasp market trends,” with a focus on how NVIDIA, Intel and Qualcomm use AI in semiconductor design and production to facilitate informed decision-making. “Buyers should also explore AI’s potential applications across various industries, from healthcare to automotive, to gauge future equipment capabilities and functionalities,” the company continues, “enabling advanced estimation of which components and devices to procure, thereby enhancing overall supply chain efficiency.”

AI Takes Center Stage

NVIDIA’s success mirrors the rapid expansion and widespread application of AI technology, and the growing demand for high-performance, efficient semiconductor products. Thanks to the ongoing convergence of AI and semiconductors, electronics buyers now have access to more advanced and diversified products. They’re also realizing the benefits of higher production efficiency and lower costs due to the intelligent and automated application of new technologies in the production process, thus reducing production costs.

As a result of the current AI boom, the semiconductor industry is facing unprecedented opportunities and challenges. For best results, WIN SOURCE suggests buyers delve deeply into the application areas of AI technology, including AI chips, edge computing and the Internet of Things (IoT). This will help them grasp the industry’s development direction.

Considering the widespread application of AI technology, buyers may also want to expand their product lines and increase procurement of semiconductor products related to AI to meet market demands and achieve business growth. “Buyers should also establish close cooperation with suppliers to guarantee timely access to high-quality, stable semiconductor products,” WIN SOURCE adds. “With these recommendations and strategies, buyers will be able to capitalize on the opportunities presented by the AI boom and grow their businesses.”