Optimism abounds as semiconductor industry takes aim at AI-fueled trillion-dollar market – SiliconANGLE News
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The wave of adoption for artificial intelligence that is sweeping through the business world has lifted the fortunes of several technology industries, most notably the semiconductor sector.
The processor industry experienced rapid growth in the 1970s and 1980s with the rise of personal computing and electronics-driven consumer devices, and then the curve leveled off. That is about to change as major players such as Nvidia Corp. lead the next cycle of processor adoption for a technology sector that has hovered around $600 billion in market size for the past several years.
“We have a tremendous opportunity as an industry,” said Keyvan Esfarjani, executive vice president and chief global operations officer at Intel Corp. “The trillion-dollar era is upon us.”
Esfarjani delivered his remarks this week during SEMICON West, a gathering in San Francisco of semiconductor industry leaders hosted by SEMI, a microelectronics industry association focused on semiconductor manufacturing equipment and materials. His prediction of growth in the semiconductor sector has been fueled by U.S. government investment created by the CHIPS Act, legislation passed in 2022 that invested $52 billion in domestic chip production.
The industry received a further boost on Tuesday when the U.S. government announced an additional $1.6 billion in funding to develop new technologies for packaging computer chips. In keynote remarks during the conference, U.S. Department of Commerce Undersecretary for Standards and Technology Laurie Locascio noted that the government had already made $30 billion in direct funding and $25 billion in loans to-date to boost the semiconductor industry.
“We knew we had to build our domestic capacity to manufacture chips,” Locascio told the gathering. “We now have a diversity of technology that we have not had in decades.”
The CHIPS Act has also led to an expansion in wafer fabrication facilities. SEMI executives noted that 104 fabs are scheduled to come into production by 2027, concentrated primarily in Arizona and New York.
“We expect that one in four U.S. chips will be made within 250 miles of upstate New York,” said Kevin Younis, chief operating officer and executive deputy commissioner of Empire State Development. “Bringing semiconductor technology back to the U.S. is a really cool space to be in.”
The expansion of chipmaking facilities in states such as New York is also raising awareness around an industry that was not always viewed as a top job opportunity by younger technology talent. There are signs that is beginning to change, according to Ken Butler, senior director of business development at Advantest Inc.
“It wasn’t that long ago we were struggling to attract people into the semiconductor industry,” Butler said in an interview with SiliconANGLE for this story. “More young people are now coming in and saying they want to be a part of this.”
Another factor that is driving renewed interest in semiconductors is AI. As the technology becomes more prevalent in a broader range of applications, it is creating new growth opportunities within the semiconductor industry.
Though Nvidia has dominated the sale of chips for AI, there are a host of other processor firms with ambitious plans to compete in the market. Industry leaders predict this will drive significant market opportunities.
“AI is really the start of the next ‘S’ curve for this industry,” Eelco Bergman, chief business officer at Saras Micro Devices Inc., said in an exclusive interview with SiliconANGLE. “It has the potential to have a lot of legs because it changes how we interact with a lot of devices. It’s the next killer app.”
The use of in-device intelligence applications is just one element in the expected progression of AI to the edge. GlobalFoundries Inc., a recipient itself of $1.5 billion in U.S. government funding under the CHIPS Act, has plans to build a new plant for the production of gallium nitride chips in large volumes.
These semiconductors enable applications such as charging components for electric vehicles and power for wireless networking equipment. Edge use cases such as these are poised to benefit from future AI deployment.
“You are going to need AI at the edge,” GlobalFoundries Chief Executive Thomas Caulfield said during a panel discussion at SEMICON. “That will drive by itself a whole new refresh cycle. It’s as much about AI at the edge as it is AI in the cloud.”
Along with the opportunity that AI offers the semiconductor industry comes the challenge of sustainability. AI processing requires more power and there are mounting concerns about the technology’s impact on global electric power supplies.
“Generative AI is driving an explosion in demand for data center computing,” former U.S. Vice President Al Gore, chairman of the Climate Reality Project, said during a prerecorded message delivered to SEMICON attendees on Wednesday. “That’s increasing pressure on electrical grids all over the world. We need to make sure that as this technology scales it doesn’t put the planet in further jeopardy.”
Gore also called upon the semiconductor industry to redouble its efforts in the elimination of fossil fuels to power chip production.
“Fossil fuels continue to play a role in the production of semiconductors and that has to change,” Gore told the gathering. “Make semiconductor manufacturing end-use clean and sustainable. If ever there is one industry that can be 100% part of the solution and 0% part of the problem, this is it.”
A byproduct of the AI boom could be a stronger focus on quantum computing, which will require advanced chip design. Nvidia recently beefed up its efforts in this field with the debut in March of Nvidia Quantum Cloud as a microservice for testing new quantum applications and algorithms.
Companies and nation states are looking at the pairing of AI and quantum as a way to advance technology agendas. This represents a significant opportunity for the semiconductor industry, according to Subodh Kulkarni, president and CEO of Rigetti Computing Inc.
“The heart of the quantum computer is the chip,” Kulkarni said. “You need to be able to design, fabricate and test very fast. Global governments are treating quantum computing as strategic for national interest and are investing aggressively. It’s coming and it’s going to be disruptive.”
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