“Welcome to 2024: it promises to be quite the AI ride,” declares Forbes contributor Karl Freund, highlighting the “explosive growth” of the AI market. This growth is fuelled by a diverse range of applications, from autonomous vehicles and edge computing to healthcare diagnostics and creative content production. As TrendForce notes, “demand for AI chips across various sectors is surging,” fueled by advancements in natural language processing and computer vision.
Artificial intelligence (AI) is now firmly embedded in our real lives, from facial recognition on smartphones to AI-powered assistants guiding us through the day. This AI boom is also having a profound impact on the electronics industry, particularly in the chip market. With demand for AI chipsets soaring, analysts predict record-breaking sales in 2024. Deloitte predicts that the market for specialised AI chips could reach $50 billion in 2024, a significant leap from near zero in just two years. This represents a potential two-thirds share of all AI chip sales this year.
The Motley Fool claims that the waiting period for H100-powered AI servers ranges between nine and 12 months. “Major cloud service providers are trying to get their hands on this chip that reportedly costs between $25,000 and $40,000 depending on the configuration. This is precisely why Nvidia seems set to have another bumper year in 2024.”
However, navigating this market boom continues to present a complex picture. While chipmakers like Nvidia and AMD, currently dominating the AI landscape, are experiencing substantial growth, the industry faces supply chain challenges and geopolitical tensions. TSMC, the world’s largest chip foundry, is currently operating at full capacity, creating bottlenecks for companies eager to meet the market’s demands.
“Nvidia and AMD are clashing in the AI chip market,” reports TrendForce, highlighting the intense competition between the two industry giants. While Nvidia boasts the popular A100 and H100 AI chips, AMD’s recent launch of its Instinct MI300A chipset aims to challenge Nvidia’s dominance. This competitive landscape, alongside TSMC’s production limitations, could potentially cause price fluctuations and hinder the overall market growth.
Freund points to the emerging market players, “Don’t forget about Cerebras, or Microsoft Azure, or the Google TPU, or the AWS proprietary AI chips, Trainium and Inferentia. Or the dozen or so AI Startups beginning to ship new products in 2024, such as Groq, Samba Nova, D-Matrix, NeuReality, Untether.AI, Tenstorrent, and BrainChip.”
As Lisa Su, AMD’s CEO, emphasises,“First, second, and third priority are around AI, AI, AI,” she said. “Over the last thirty days, what we’ve seen is a continued acceleration of engagements” for AI in the data center. Su added that the market is “skyrocketing.”. The ongoing development of new applications and advancements in chip technology suggest that the AI boom is far from reaching its peak.
For the electronics industry, this presents both opportunities and challenges. Chipmakers must navigate the complex supply chain landscape and invest in advanced technologies to meet the ever-evolving demands of the AI market. For those outside the chipmaking sector, the AI boom represents a potential windfall as new applications and services powered by AI chips continue to emerge.
Thousands of senior engineers and procurement professionals subscribe to our LinkedIn Market Intel newsletter – get yours here
For more help with looking at supply chain options, contact Astute Electronics