The first quarter of 2024 has been a landmark period for AI server applications, marked by a significant surge in revenue generation, more than doubling year-on-year. This remarkable growth is primarily attributed to the continued strong demand for AI chips, a sector where companies like Nvidia and Advanced Micro Devices are leading players.
Taiwan Semiconductor Manufacturing Co (TSMC), known for being the world’s largest contract chip maker, has played a crucial role in this uptrend. TSMC’s fourth-quarter revenue exceeded expectations, countering the anticipated decline, thanks to the robust demand from AI players. This demand helped offset the sluggish sales in smartphone and laptop chips. TSMC’s sales figures for December, completing a noteworthy quarter, matched the earnings from the same period in the previous year, which were among TSMC’s highest quarterly results.
In the broader context, TSMC’s performance is indicative of a larger trend within the semiconductor industry, where AI chips for high-performance computing have become increasingly vital. Companies like Samsung Electronics, also a major player in the chip market, have experienced declining operating profits due to muted consumer demand in areas like smartphones and memory businesses. However, the demand for AI chips has provided a much-needed boost to the sector.
The increase in revenue from AI server applications aligns with the general trajectory of the semiconductor industry. According to TrendForce, 2024 is expected to see significant expansion in edge AI applications, leveraging the groundwork laid by AI servers and extending into AI PCs and other terminal devices. The global AI server market is projected to exceed 1.6 million units, growing at an impressive rate of 40%. This growth is spurred by the involvement of Cloud Service Providers (CSPs), who are ramping up their investment in this sector.
The AI PC market is also poised for growth, driven by the demand for terminal applications and the integration of advanced AI capabilities into mainstream computing devices. Microsoft, through its Windows OS and Office suite, is a significant driver of this demand. Additionally, the push by leading CPU manufacturers like Intel, advocating for AI PCs that combine CPU, GPU, and NPU architectures, further underlines the growing importance of AI in computing technologies.
The first quarter of 2024 has set a precedent for the AI server application market, with revenues more than doubling due to the sustained high demand. This trend highlights the increasing reliance on AI technologies across various sectors and the pivotal role of semiconductor companies in meeting this demand.