Why all the chip companies aren’t benefiting from the AI ​​boom like Nvidia | Wilnesh News

Earnings showed that not all chip companies are benefiting from the artificial intelligence boom, underscoring the complexity of the semiconductor supply chain and the dominance of some companies over others in different parts of the industry.

A number of semiconductor companies reported financial results for the June quarter, with some beating estimates and others disappointing, providing a glimpse into how the excitement about artificial intelligence is affecting their earnings.

The current interest in artificial intelligence mainly revolves around two key terms – large language models (LLM) and generative artificial intelligence. The LL.M. requires vast amounts of computing resources and data to train, which underpins generative artificial intelligence applications such as chatbots Google and OpenAI.

The tech giants training LL.M.s are not cutting back. Yuan It said on Wednesday it expects capital expenditures to grow “significantly” in 2025 “to support our artificial intelligence research and product development efforts.” Microsoft It said this week that capital spending in the second quarter rose nearly 80% year-on-year to $19 billion.

The spending is a big boost for Nvidia as the tech giant continues to add computing resources, as the company’s graphics processing units (GPUs) are used to train these LL.M.

But Nvidia’s competitors AMD has brought its own chip, called the MI300X AI chip, to market for AI purposes and is starting to see returns. AMD said on Tuesday it expects data center GPU revenue to exceed $4.5 billion in 2024, up from the $4 billion the company forecast in April. The chip company reported second-quarter profit and revenue that beat market expectations.

Chip manufacturing and tooling companies also appear to be benefiting from the AI ​​boom. British SemiconductorThe world’s largest semiconductor maker said last month that its second-quarter net profit rose more than 36% annually as financial results beat market expectations.

at the same time ASMLThe company, which makes specialized tools needed to make the world’s most advanced chips, said last month that net bookings rose 24% annually in the second quarter, underscoring demand from semiconductor manufacturers such as TSMC. Samsung said its second-quarter operating profit increased by 1,458.2% year-on-year.

But not all semiconductor companies have been boosted by the growth in AI investments because they have far less exposure to the technology at its current stage.

Qualcomm and arm Their shares fell Wednesday after issuing light guidance for the current quarter.

While both companies have been talking about their importance to artificial intelligence applications, the reality is that their exposure to the technology is still very limited.

Arm designs the blueprints for many of the company’s chips, and its semiconductors are used in most of the world’s smartphones. Although many electronics manufacturers are talking about artificial intelligence phones, this does not lead to fundamentally higher growth for chip designers.

The British company still gets a large portion of its revenue from consumer electronics, rather than the successful data centers of AMD and Nvidia. Analysts have previously told CNBC that Arm may benefit from artificial intelligence when more devices start to adopt artificial intelligence technology.

Qualcomm’s chips are used in smartphones, such as those made by Samsung, and the company still makes most of its revenue from mobile phones. Like Arm, Qualcomm’s chips are not used in the type of data centers where LL.M.s are trained.

The company’s chips will be used in Microsoft’s upcoming artificial intelligence PCs, but again, this is a long-term strategy for Qualcomm.