AI Chip – The Need for Semiconductors

AI Chip – The Need for Semiconductors

Artificial intelligence is booming at the moment as ChatGPT is making global headlines. It was the talk for the last half-decade, but its now entering our everyday lives as AI will continue to evolve in different ways from current models. As this industry is projected for rapid growth, other industries in the tech sector are slated to benefit, and one of them is the semiconductor industry.

Weve learned throughout the pandemic how vital semiconductors, also known as chips, are to our current economy. A vital component of goods ranging from refrigerators to vehicles, the chip industry became one of the victims of supply chain shortages during the pandemic due to the sky-high demand, but the industry has been able to overcome this hurdle.

As shown by industry giant Nvidia in their Wednesday earnings report, the chip market is set to benefit massively from the growth in AI. AI requires a massive amount of computing power in order to function properly and efficiently with all of the data it is storing and sending, which means specialized chips and processors are needed. This opens a new area for these businesses to supply the rising demand for these unique parts, and Nvidia has complete control of the AI processor area at the moment, fueling what was an amazing quarter for the company.

This wont last forever as companies like AMD and Intel start to bite into Nvidias market share, but its a positive for the industry as a whole because analysts estimate that this AI chip market could result in tens of billions of dollars in sales. It doesnt come at a better time as President Bidens CHIPS Act is giving massive subsidies to boost domestic production, giving Nvidia and other semiconductor companies a major incentive to align their business boost with US economic growth.

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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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