Analysts see the AI chip race boosting growth, inspiring innovation among semiconductors

Bottlenecks in chip deployment and tech advancements pose challenges to growth.

The booming demand for advanced chips powering AI is pushing the semiconductor sector to step up and keep pace with innovation to stay relevant in an increasingly competitive environment, according to analysts.

Suchi Srinivasan, managing director and partner at Boston Consulting Group (BCG), said tech giants like Intel, Meta and Google had recently unveiled new models of AI chips amid the growing use of AI. 

While many have already secured chip suppliers and some are ramping up efforts to produce their own, Srinivasan expects specialised chips with greater efficiency will emerge to handle more complex AI tasks.

“Everyone needs a supply of AI chips. And the opportunity to supply them is vastly larger than any one company can realistically fulfill. So there’s plenty of room for new players, and the ecosystem is evolving rapidly,” Srinivasan wrote in a blog on 17 April.

“The market is hungry for viable and competitive options to supply AI chips, but it remains to be seen how fast alternative sources of supply will be able to offer the desired price, sophistication, and scale,” he added.

Creating pricing structures and balancing the supply and demand dynamics of the advanced chips are just some of the challenges manufacturers will likely face in the near term according to BCG.

For the long term, Srinivasan said companies should prepare to address potential bottlenecks in advancing chip technologies and deployment while ensuring operations can easily respond to the shifting requirements of AI builds.

In a separate note also on 17 April, Kiran Raj, practice head of disruptive tech at GlobalData, said the rising use of generative AI helped intensify competition among chipmakers as they race to develop solutions that can meet the computational requirements of AI applications.

GlobalData’s latest Innovation Radar report took a deep dive into at least 50 cases of actual use of advanced chips globally, assessing the tech’s impact and promises in various sectors including automotive, healthcare, power, technology and telecom.

“Despite integration challenges and supply chain issues, semiconductor chips hold immense potential in propelling diverse industries towards an intelligent, efficient, and innovative future,” said Saurabh Daga, associate project manager for disruptive tech at GlobalData.