Reshaping the semiconductor landscape - generative AI, customized chips, and memory outlook in 2024

TAIPEI,Oct. 4,2023 -- In 2024,the semiconductor sector faces pivotal shifts as demand for silicon wafers varies and global equipment spending adapts. At the forefront of these changes are innovations in high-performance computing (HPC) and AI server supply chains. DIGITIMES Asia will spotlight these transformations at the "2024 Next-Gen Intelligence Symposium" on Nov 3rd,2023. The event,featuring insights from DIGITIMES' senior analysts Tony Huang and Jim Hsiao,as well as AI server experts from Supermicro,aims to provide insights into the industry's outlook in the coming years.

Credit: DIGITIMES

Tony Huang,consultant and director at the DIGITIMES Research Center,will offer insights into the evolving tech landscape and Asia's supply chain dynamics in the DIGITIMES Strategy+ Symposium to be held at the Alexandria Center for Life Sciences in San Carlos,California.

In a recentinterview with DIGITIMES Asia,Huang delves into the challenges faced by the semiconductor market in 2023 and offers a glimpse into what lies ahead in 2024 and beyond.

Challenges Faced by the Semiconductor Industry in 2023

The semiconductor industry,long known for its rapid growth and innovation,encountered unexpected hurdles in 2023. However,Tony Huang highlights the role of generative AI in driving capital expenditure related to data centers. Semiconductor demand for cloud AI is expected to be a major driver of investment in 2024.

Some cloud service providers are customizing their own chips to optimize costs and energy consumption efficiency. For example,Broadcom has collaborated with Google to develop TPU chips,while foundries like TSMC manufacture many of these customized chips for cloud service companies. GPUs and customized chips for cloud services are projected to be the main drivers of sales growth for TSMC and the semiconductor industry in the next five years.

The memory market experienced significant fluctuations in 2023. While memory once accounted for more than 30% of the overall market sales,its share dropped to 17% in 2023. Major memory manufacturers reduced capital expenditures and capacity utilization for DRAM and NAND flash,leading to an oversupply. But companies such asSamsung are starting to predict a short supply in 2024.

Market in 2024 and Beyond

Looking ahead to 2024,it is expected that the supply of DRAM and NAND flash will shift from surplus to shortage,according to DIGITIMES Research. This shift will significantly increase their sales amount and share in the overall semiconductor market,potentially surpassing 20%. However,the growth in sales will remain closely tied to the shipment growth of smartphones and PCs.

Furthermore,the memory market's future highlights include increased demand for server memory,particularly for general and AI servers,which will drive demand for DDR and high bandwidth memory (HBM).

In the automotive sector,the rise of ADAS and smart cockpits will bolster the demand for DRAM,NAND,optoelectronic semiconductors for sensing,and application processors,making them stand out among other semiconductor categories.

Conclusion

The semiconductor industry has faced challenges in 2023,but it is poised for a more promising 2024. With smartphones,PCs,servers,and emerging markets like automotive and industrial applications driving demand,the industry is expected to rebound. Additionally,the growth of generative AI and customized chips for cloud services will be pivotal in shaping the industry's trajectory over the next five years. Memory,once in decline,is poised for a resurgence,driven by increased demand in various sectors,particularly the automotive and server markets. As technology continues to evolve,the semiconductor industry remains dynamic,adapting to new opportunities and challenges on the horizon.

If you wish to delve deeper into the AI Server supply chain and its outlook,register and join us in person at the symposium on Nov 3,2023,for a groundbreaking discussion:

Media contact: joyce.siow@digitimes.com