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Hardware: Growth in AI and Self-Driving Cars will Rescue Semiconductors. But When?
Sales of semiconductors have plunged in 2019. A weaker economy, the US trade war with China, and an oversupply of memory chips. The slump in semiconductors is the biggest since the 2008 recession. Predictions from Gartner and other analysts are that the slump is likely to continue at least over the next few quarters.
Bill Ray, Gartner analyst, commented that “the quantity of semiconductors sitting around in the supply chain hasn’t been normal since 2010, and pushed into the Severe Excess Zone in both 2012 and 2016. But, inventory levels are now at a peak not seen since the turn of the century, and the industry is going to have to do something about it. “
Onehope for turning the slump around are emerging technologies, but how just how quickly they will contribute to the bottom line is anyone’s guess. Two of these technologies are specialized chips for AI and semiconductors for use in autonomous vehicles.
McKinsey said that “With hardware serving as a differentiator in AI, semiconductor companies will find greater demand for their existing chips, but they could also profit by developing novel technologies, such as workload-specific AI accelerators.”
JanusHenderson is bullish on semiconductors used in self-driving cars. They wrote that “in 2016, some US$30 billion in semiconductor content was present in autos, which translates to roughly $300 per vehicle. Over the next decade, we expect this number to approach $100 billion, or nearly $1,000 per vehicle.”
