Outlook for China's AI Chip Industry in 2024: A Trend of Vigorous Development

[baoshi.rao]

AI chips, also known as AI accelerators or computing cards, are powerful modules specifically designed to handle large-scale computational tasks in artificial intelligence applications. Unlike traditional CPUs and GPUs, AI chips are tailored for highly complex mathematical and logical operations, making them more efficient in processing AI workloads. Currently, AI chips are mainly categorized into three types: GPUs, FPGAs, and ASICs. With the continuous maturation of AI and chip technologies, the application fields of AI chips are expanding, benefiting downstream industries from cloud computing to consumer electronics, autonomous driving, and smartphones, all leveraging the robust performance of AI chips. As the world's largest AI market, China's AI chip industry is in a golden period of rapid development.

The Rise of China's AI Chip Industry
In recent years, China's AI chip industry has garnered widespread attention. With continuous technological advancements and sustained growth in market demand, new AI chip manufacturers have emerged like mushrooms after rain. This trend has not only driven the rapid expansion of the industry's market size but also further elevated China's position in the global AI chip market. In 2022, China's AI chip market reached 85 billion yuan, a year-on-year increase of 94.6%. It is projected that by 2023, the market size will grow to 120.6 billion yuan, and by 2024, this figure will surge to 230.2 billion yuan.

Data Source: 2023-2028 China AI Chip Market and Development Trend Analysis Report

Future Prospects of the AI Chip Industry
Strong National Policy Support: Artificial intelligence is a key technology driving the new wave of scientific and industrial revolution. The Chinese government places high importance on AI development, positioning it as a national strategy and introducing a series of policies to encourage and support research and applications in this field. For instance, the New Generation Artificial Intelligence Development Plan clearly outlines a "three-step" strategic goal for China's AI development by 2030. Additionally, the "14th Five-Year Plan" explicitly states the need to "promote the deep integration of the internet, big data, artificial intelligence, and other technologies with various industries." These policies not only provide significant development opportunities for the AI industry but also greatly accelerate the rapid growth of the AI chip sector.

Improvement in Domestic Chip Capabilities: With the accelerated construction of new infrastructure such as 5G base stations, artificial intelligence, and industrial internet, AI chips, as the technological backbone of these fields, are facing enormous market demand. It is expected that this will spur a large demand for high-end, specialized chips, propelling the AI chip industry into a phase of rapid growth. Simultaneously, as the technological level of domestic AI chips continues to improve, Chinese companies will gain a competitive edge in algorithm effectiveness and implementation costs for top-tier AI applications, offering superior products and services to global customers.

Downstream applications expanding widely: The application fields of AI chips are rapidly growing. Beyond traditional areas like autonomous driving, data centers, cloud computing, and edge computing, they now encompass robotics, smart manufacturing, new infrastructure, smart homes, intelligent finance, smart education, and healthcare—among other cutting-edge and fast-developing sectors. The rapid growth of these fields not only propels continuous advancements in AI chip technology but also provides broader application scenarios. As people demand higher living standards, the comprehensive adoption of AI chips has become an inevitable trend, further driving the sustained development of the AI chip industry.

The AI chip industry is thriving, with increasing market demand, continuous technological innovation, and intensifying competition. In the future, as AI technology evolves and application fields expand, the AI chip sector will embrace even greater growth opportunities.

Future Trends in the AI Chip Industry

1. Continuous technological innovation: As AI algorithms and models evolve, AI chips must constantly update their designs to meet new computational demands. Future AI chips may adopt more advanced manufacturing processes, such as 5nm or 3nm, to achieve higher efficiency and performance.

2. Further expansion of application fields: With the widespread adoption of AI technology, AI chips will penetrate more sectors. Beyond smartphones and data centers, they may be applied to smart home devices, intelligent robots, smart toys, and more.

3. Tighter integration with cloud and edge computing: Future AI chips may work more closely with cloud and edge computing. They could handle partial computations on edge devices before uploading results to the cloud for further processing and analysis. This approach reduces data center workloads, improves efficiency, and enhances data security.

4. Greater customizability: Future AI chips may emphasize customization. Different applications require varying computational tasks and performance levels, so AI chips must adapt to specific needs.

5. Enhanced integration capabilities: AI chips may integrate more functionalities, such as sensors, memory, and communication modules. This integration reduces power consumption, boosts efficiency, and simplifies development.

6. Stronger ecosystem collaboration: Future AI chips may partner with more ecosystem players, including operating systems, software applications, and algorithm providers. Such collaborations can deliver comprehensive solutions tailored to diverse customer needs.