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Surging demand for artificial intelligence semiconductors and AI-enabled smartphones and laptops could lead to the next global chip shortage, consultancy Bain & Company said in a report on Wednesday.
The last major semiconductor shortage occurred during the Covid-19 pandemic, when supply chains were disrupted and people were forced to stay home and work, leading to increased demand for consumer electronics.
Tech giants have been snapping up graphics processing units (GPUs), mainly from NVIDIA. These data center-based GPUs are critical for training the large artificial intelligence models that power applications such as OpenAI’s ChatGPT.
At the same time, companies like Qualcomm Chips are being designed for use in smartphones and PCs and allow these devices to run artificial intelligence applications locally rather than through an Internet connection in the cloud. These are often referred to as AI-enabled devices and companies, ranging from Samsung to Microsoft Such products have already been released.
Bain said demand for GPUs and artificial intelligence consumer electronics may be the reason for the chip shortage.
“The surge in demand for graphics processing units (GPUs) has led to shortages in specific elements of the semiconductor value chain,” Anne Hoecker, head of Bain & Company’s Americas technology practice, told CNBC via email.
“If we combine the growth in GPU demand with the wave of artificial intelligence devices, which may accelerate the PC product refresh cycle, then there may be broader constraints on semiconductor supply.”
However, it’s unclear how much demand there will be for such AI devices, given that consumers appear to be wary of them so far.
Bain & Company noted that the semiconductor supply chain is “extremely complex and demand growth of approximately 20% or more is likely to tip the balance and lead to wafer shortages.”
“The explosion of AI at the intersection of large end markets could easily exceed this threshold, creating vulnerable choke points throughout the supply chain,” the report added.
The semiconductor supply chain spans multiple companies. For example, while Nvidia may design its GPUs, they are manufactured by TSMC, or British Semiconductorin Taiwan. TSMC relies on chip manufacturing tools from countries around the world, including the Netherlands. Moreover, the most cutting-edge chips can only be manufactured on a large scale by TSMC and Samsung Electronics.
Geopolitics may also be a factor in the chip shortage. Semiconductors are considered a strategic technology by governments around the world. The United States has been trying to restrict China’s access to the most advanced chips through export restrictions and other sanctions. At the same time, Washington has been seeking to strengthen domestic semiconductor production capabilities.
“Geopolitical tensions, trade restrictions, and decoupling among multinational tech companies
Supply chains from China continue to pose serious risks to semiconductor supply. Delays in factory construction, material shortages and other unpredictable factors may also cause distress,” Bain & Company said.
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