Research on the Prospects and Market Outlook of the AI Chip Industry
-
William Li, a senior analyst at Counterpoint, believes that artificial intelligence is the primary growth driver for the semiconductor industry in 2024. He also predicts that the memory business will recover as oversupply normalizes and demand rebounds.
Technological innovation in the AI chip industry will continue to drive its development. Currently, the AI chip industry is in a rapid development phase, with various new chip architectures, manufacturing processes, packaging, and testing technologies emerging. These innovations will help improve the performance of AI chips, reduce power consumption and costs, and promote their broader application across various fields. Governments worldwide are introducing policies to support the development of artificial intelligence and the AI chip industry.
Research on the Prospects and Market Outlook of the AI Chip Industry
The development of the AI chip industry requires the collaborative growth of the entire supply chain. With the continuous advancement of artificial intelligence technology, AI chips will integrate more closely with technologies in other fields, such as cloud computing, big data, and the Internet of Things. This will help accelerate the rapid development of the AI chip industry and drive the upgrading and transformation of the entire supply chain.
In recent years, the global chip industry has been in a downturn, with oversupply and increasing inventory pressures. In the second half of 2023, there were signs of recovery in the chip industry, but the overall performance for the year remained poor and challenging.
According to preliminary statistics from market research firm Gartner, global semiconductor revenue in 2023 totaled $533 billion, a decline of 11.1% year-on-year. Among the top 25 manufacturers, only nine achieved revenue growth, while ten experienced double-digit declines. Open AI has released the text-to-video large model Sora, achieving a milestone in the global video large model domain. "The competition in the large model field remains fierce globally, which will continue to enhance the overall capability level of large models," said Yan Lei, an analyst at Ping An Securities. Large models require massive computing power, and the iterative upgrades of large model algorithms will provide strong momentum for the growth of the global and Chinese AI computing power markets.
AI video generation and other multimodal models are expected to play a more significant role in IP development for industries such as film, animation, gaming, and music. This will further drive cost reduction and efficiency improvement in IP development, create incremental monetization opportunities, and boost computing power demand.
"AI, with its potential to exponentially amplify global productivity, has become the 'Noah's Ark' that could lift the world economy out of its trough. 2024 may be the true first year of AI applications, with three new directions—AI terminal reconstruction, domestic computing power, and multimodal AI applications—presenting significant opportunities," noted a research report from Minsheng Securities.
2023 Performance Exceeds Expectations
In 2023, Nvidia became the most sought-after stock in the market due to its consistently outperforming financial results. A review of Nvidia's quarterly reports over the past three years reveals that before fiscal year 2024 (ending January 31, 2023), its financial data was volatile. However, starting from the first quarter of fiscal year 2024 (February 1, 2023–April 30, 2023), Nvidia's revenue and net profit began to surge. In the third quarter of fiscal year 2024 (August 1, 2023–October 31, 2023), Nvidia's revenue increased by 205% year-on-year, while net profit soared by 12 times. The Bank of America Global Fund Manager Survey reveals that institutional allocations to the technology sector have reached their highest level since August 2020. Meanwhile, retail investors are pursuing greater returns through derivatives such as options. According to Cboe Global Markets data, bullish demand is approaching the most distorted levels seen since the 2021 meme stock frenzy.
Additionally, billionaire investors, including Ray Dalio, Paul Tudor Jones, and Stanley Druckenmiller, have been increasing their investments in this chip manufacturer.
AI Chip Industry Chain Analysis
The AI chip industry chain primarily consists of upstream materials and equipment, midstream product manufacturing, and downstream application markets.
The upstream materials and equipment segment mainly involves semiconductor materials and semiconductor equipment. Semiconductor materials include monocrystalline silicon, monocrystalline germanium, gallium arsenide, and transistors, while semiconductor equipment encompasses lithography machines and plasma etching machines, among others. In this segment, lithography machines have become critical equipment in the industry chain, with their technological level directly impacting the precision and efficiency of chip manufacturing.
The midstream product manufacturing segment includes two main stages: chip design and chip manufacturing. Chip design primarily involves processes such as system design, RTL design, and physical design using EDA tools, while chip manufacturing includes wafer processing, wafer testing, wafer dicing, and chip packaging. In this segment, chip design relies on various design software and tools, whereas chip manufacturing requires high-precision manufacturing equipment and processes. The downstream application market mainly involves various fields that utilize AI chips, including cloud computing, autonomous driving, smartphones, drones, smart speakers, and intelligent security. In this segment, the performance and power consumption of AI chips directly impact the performance of end products and user experience.
Currently, China's AI chip industry is in a period of rapid development but also faces challenges such as limitations in upstream equipment and technology, the need for improvement in midstream design and manufacturing capabilities, and the continuous expansion required in downstream application markets. Therefore, enhancing cooperation and synergy among enterprises across the industry chain and improving the overall technical level and competitiveness of the entire industry chain are crucial for driving the sustainable and healthy development of the AI chip industry.
AI Chip Industry Prospects Analysis
The application scenarios for AI chips are extremely broad, spanning industries such as intelligent security, autonomous driving, smartphones, smart retail, and intelligent robotics. The demand for AI chips in these fields has propelled the rapid development of the AI chip industry. Simultaneously, with advancements in technical capabilities and increased R&D investments, the design and manufacturing levels of AI chips are continuously improving, further driving industry progress.
In recent years, China has made significant strides in technologies such as the internet, 5G, cloud services, and satellite positioning, providing robust technical support for the development of the autonomous driving industry. This sector's growth has also imposed higher demands on the AI chip industry while offering vast market opportunities. Data shows that China's autonomous driving industry market size reached 289.4 billion yuan in 2022. Statistics indicate that global AI chip shipments amounted to 14.33 million units in 2022, representing an 18.2% year-on-year growth. It is projected that AI chip shipments will increase to 16.4 million units in 2023, growing by 14.4% year-on-year. This growth trend demonstrates that the global AI chip market is in a phase of rapid development.
In the fiercely competitive market, the ability of enterprises and investors to make timely and effective market decisions is crucial for success. The AI chip industry report compiled by China Research Network provides a detailed analysis of the development status, competitive landscape, and market supply-demand situation of China's AI chip industry. It examines industry opportunities and challenges through the lens of policy environment, economic conditions, social factors, and technological advancements. The report also reveals potential market demands and opportunities, offering strategic investors accurate market intelligence and scientific decision-making references for investment timing, while providing valuable insights for corporate leadership in strategic planning. Additionally, it serves as an important reference for government departments.