Surging AI demand could cause the world’s next chip shortage, research says

Due to supply chain disruptions brought on by the Covid-19 pandemic and a rise in consumer electronics demand as a result of the country’s forced migration to remote work, the declining primary semiconductor shortage occurred.

Era giants were snapping up graphics processing devices, or GPUs, principally from Nvidia. The GPUs found in knowledge centers are crucial for the development of excess AI models, which are the foundation of software programs such as OpenAI’s ChatGPT.

Meanwhile, companies such as Qualcomm are developing chips that find their way into smartphones and personal computers, enabling those devices to run artificial intelligence programs locally rather than through a cloud web connection.

These are commonly referred to as AI-enabled devices, and companies like Microsoft and Samsung have refrained from producing them.

According to Bain, the need for AI consumer electronics and GPUs could be the cause of a chip shortage.

“Surging demand for graphics processing units (GPUs) has caused shortages in specific elements of the semiconductor value chain,” Anne Hoecker, head of the generation follow within the Americas at Bain & Corporate, instructed CNBC by means of e-mail.

“If we combine the growth in demand for GPUs alongside a wave of AI-enabled devices, which could accelerate PC product refresh cycles, there could be more widespread constraints on semiconductor supply.”

Then again, it’s hazy at this level how a lot call for such AI-enabled devices may have, given what seems to be a wary way to them from customers to this point.

The semiconductor supply chain is “incredibly complex, and a demand increase of about 20% or more has a high likelihood of upsetting the equilibrium and causing a chip shortage,” according to renowned research by Bain & Corporate.

The document also stated, “The proliferation of AI in the convergence of the major end markets could easily surpass that threshold, creating susceptible chokepoints throughout the supply chain.”

Many companies are developing the semiconductor supply chain. For example, generation Nvidia may develop its GPUs; Taiwan Semiconductor Production Co., or TSMC, is the company that manufactures them.

TSMC is dependent on international suppliers of chip manufacturing equipment, including the Netherlands.

Furthermore, only TSMC and Samsung Electronics are able to produce chips on a large scale that are practically state of the art.

Another factor contributing to a chip inadequacy is geopolitics. Semiconductors are clear by means of governments all over the world as strategic generation.

The U.S. has been on a marketing campaign, by means of export restrictions and alternative sanctions, of looking to limit China’s admission to essentially the most complex chips.

In the meantime, Washington has wished to shore up its personal home capability to manufacture semiconductors.

“Geopolitical tensions, trade restrictions, and multinational tech companies’ decoupling of their
supply chains from China continue to pose serious risks to semiconductor supply. Delays in factory construction, materials shortages, and other unpredictable factors could also create pinch points,” Bain & Corporate stated.