Artificial intelligence may become a key driving force for the recovery of the global chip industry

According to Gartner's preliminary statistics, the total global semiconductor revenue in 2023 reached $533 billion, a year-on-year decrease of 11.1%. Among the top 25 major companies, only 9 achieved revenue growth, and 10 even experienced double-digit declines. The latest report from Counterpoint also shows that the global semiconductor industry's revenue decreased by 8.8% in 2023. Especially the memory industry has been hit the hardest, with a year-on-year decrease of 43%, resulting in the market share of the top 20 suppliers dropping from 76% in 2022 to 71% in 2023.

In 2023, global storage chip sales decreased by 4.1%, and revenue decreased by 37%. This is mainly affected by the decrease in demand for smartphones, personal computers, and servers, as well as the excess inventory of manufacturers. However, what has shown the industry a glimmer of hope is the rise of artificial intelligence (AI).

Companies such as Microsoft, Google, and Nvidia are rapidly increasing their market value in the field of generative AI, with their stock prices rising by over 50% over the past year. Especially NVIDIA, as a major beneficiary of artificial intelligence technology, its strong position in the global AI chip market is ensured by its approximately 90% market share.

For 2024, industry insiders are optimistic that the chip industry will experience recovery and growth, one of the main reasons being the gradual recovery of the consumer electronics market and the booming development of the artificial intelligence industry. IDC predicts that the semiconductor sales market will recover in 2024, with an annual growth rate of 20%.

The President of the Semiconductor Industry Association (SIA) of the United States stated that global semiconductor sales achieved year-on-year growth for the first time since August 2022 in November 2023, indicating that the global chip market will become even stronger in 2024. William Li, Senior Analyst at Counterpoint, believes that artificial intelligence will become the main growth driver for the semiconductor industry in 2024, while the memory business will also experience a recovery.

TrendForce is also optimistic about the driving force of AI on the industry, believing that server shipments are expected to recover in 2024, and AI servers are expected to grow by over 38% again on the basis of 2023.

However, there is disagreement within the industry regarding the automotive chip market. Although some analysts predict growth in 2024, the automotive chip market is highly competitive, and manufacturers such as Texas Instruments and STMicroelectronics predict that there may be an oversupply of automotive chips, industrial chip demand will continue to be weak, and the recovery time of the semiconductor industry may be longer than expected.

Overall, the global chip industry is undergoing a turning point, and artificial intelligence is considered one of the key drivers of industry recovery and growth.