Current Development Status and Trends of the AI Chip Industry
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What are the application prospects of China's AI chip market? What is the current state of the AI chip market? As artificial intelligence plays an increasingly prominent role in future societal development, the country has gradually elevated the development of the AI industry to a national strategic level, with AI chip R&D and technological upgrades receiving significant attention and emphasis. China's 14th Five-Year Plan and the Long-Range Objectives Through the Year 2035 explicitly proposes strengthening the innovative application of key digital technologies, focusing on critical areas such as high-end chips and AI key algorithms, accelerating breakthroughs and iterative applications in fundamental theories, algorithms, and equipment materials, and fostering the growth of emerging digital industries like AI.
In recent years, as awareness of the importance of AI chips for computing power has grown, the number of players in the AI chip sector has also increased. The advancement of AI technology will usher in a new era—the era of 'algorithms as chips.'
Currently, AI chips are mainly categorized into GPUs, FPGAs, and ASICs. Much of AI's data processing involves matrix multiplication and addition. GPUs, with their ability to perform massive parallel operations, offer a cost-effective solution but come with higher power consumption. FPGAs, equipped with built-in DSP modules and local memory, are more energy-efficient but generally more expensive. The first generation of AI chips in the market includes various combinations of off-the-shelf CPUs, GPUs, FPGAs, and DSPs. While new designs are being developed by companies like Intel, Google, NVIDIA, Qualcomm, and IBM, at least one CPU is required to control these systems, with various types of coprocessors needed when parallelizing streaming data.
As more enterprises integrate AI into their end products, the demand for AI chips is growing rapidly, presenting vast market prospects.
Many domestic AI chip companies are rapidly expanding their scale through this trend. What are the chances that domestic AI chip companies, through financing, mergers and acquisitions, and the coordination of R&D technologies and talent, will give rise to larger AI chip corporations? The development of enterprises follows a pattern: first comes a technology, then a product. After the product succeeds, the company expands into multiple technologies. As the technology expands, the workforce grows, leading to management challenges.
With the development of large-scale AI and ChatGPT scenarios, the proportion of supercomputing/intelligent computing centers in China is expected to further increase:
- Intelligent Computing Centers: Data centers serving AI needs, including artificial intelligence, machine learning, and deep learning, primarily using GPUs and other AI training chips to provide larger computing scales and faster speeds, with the core goal of improving computational power and quality per unit time and energy consumption.
- Supercomputing Centers: Facilities that provide an operational environment for supercomputers (high-performance computing platforms composed of general or specialized hardware and software designed to process complex data, algorithms, and applications).
AI Chip Market Size and Development Trends Analysis 2023
The AI chip industry is capital- and technology-intensive, with high technical barriers. As a result, China's AI chip companies are concentrated in economically developed and talent-rich regions like Beijing, Shenzhen, and Shanghai.
China's AI chip industry started relatively late and still lags behind global advanced levels in technology. The domestic AI chip market is also fragmented, with low concentration. Based on registered capital, first-tier companies include SMIC, HiSilicon, Horizon Robotics, NavInfo, and JCET.
The upstream of the AI chip industry chain primarily involves chip design, which can be further divided into three business models: IP design, chip design foundry, and chip design, with most companies being IC design firms.
AI chips serve as the 'brain' of artificial intelligence. Current AI chip types include CPUs, GPUs, FPGAs, DSPs, ASICs (application-specific integrated circuits for neural network algorithms), and brain-inspired chips. ASICs are expected to replace general-purpose chips as the mainstay of AI chips in the coming years.
AI chips are mainly applied in cloud computing, data centers, edge computing, consumer electronics, smart manufacturing, autonomous driving, smart finance, and smart education.
1. Market Share
AI chips mainly include Graphics Processing Units (GPUs), Field-Programmable Gate Arrays (FPGAs), Application-Specific Integrated Circuits (ASICs), and Neural Processing Units (NPUs). Among these, GPUs, as the core units of graphics cards and single-instruction, multiple-data processors, hold the highest market share in the AI chip market at 91.9%. NPUs, ASICs, and FPGAs account for 6.3%, 1.5%, and 0.3% of the market, respectively.
2. Market Size Forecast
AI chips are widely used in cloud computing, data centers, edge computing, consumer electronics, smart manufacturing, autonomous driving, smart finance, and smart education. In recent years, China's AI chip industry has garnered significant attention, with new manufacturers and designers emerging continuously, leading to rapid market expansion.
Data shows that China's AI chip market reached 42.7 billion yuan, marking a 124% year-on-year growth. It is projected to expand further to 120.6 billion yuan by 2023.
Currently, China's AI chip industry is still in its early stages. With the advancement of big data and computing power, artificial intelligence has experienced a new wave of growth in recent years. Under this AI wave, industries such as cloud computing, smart vehicles, and intelligent robotics are developing rapidly, driving increasing demand for AI chips. The AI chip market is poised for significant opportunities.
3. Analysis of Potential Market Entrants
Domestically, BAT (Baidu, Alibaba, Tencent) tech giants have ventured into the AI chip business. For instance, Alibaba fully acquired domestic chipmaker C-SKY and has invested in companies like Cambricon, Barefoot Networks, DeePhi, Kneron, and ASR. Over the past few years, Baidu has also made notable progress in deep learning.
While all industries could theoretically enter the AI chip market, the barriers—such as high technical, financial, and talent requirements—are substantial. For most companies, entry is nearly impossible. The most likely entrants are upstream or downstream firms seeking cost savings or business expansion. Overall, the threat from potential entrants to the AI chip industry is relatively low.
4. Market Structure
Computing power, realized through AI chips, is a key metric for measuring AI development progress. Developing AI chips with superior processing capabilities is one of the core drivers of the AI industry's explosive growth, playing a decisive role in technological advancements and applications.
Globally, the AI chip market is dominated by Europe, the U.S., Japan, and South Korea in mid-to-high-end cloud chips. China's focus is primarily on terminal ASIC chips, with some areas leading globally. However, most players are startups, and the ecosystem lacks influential "chip-platform-application" integration, making it difficult to compete with traditional chip giants like NVIDIA and Xilinx. In GPU and FPGA sectors, China is still catching up, relying heavily on imports for high-end chips.
5. Market Share Distribution
In the AI chip sector, foreign chip giants hold the majority of the market share. Key global players include Intel, NVIDIA, Qualcomm, and Google, which lead in talent acquisition, mergers, and other strategic areas. U.S. companies, leveraging their long-standing dominance in chips, have quickly entered and expanded in AI, becoming industry leaders. They also hold a near-monopoly in GPU and FPGA markets.
This report, based on years of research and China's AI chip market realities, combines insights from expert analysts and authoritative national data to provide the most comprehensive and reliable study available on China's AI chip market.
The AI chip industry research report can help investors rationally analyze the current market situation of the industry, forecast industry prospects for investment decisions, identify investment value, and provide recommendations on industry investment strategies, marketing strategies, as well as analyze opportunities, risks, AI chip development strategies, and investment suggestions.