Edge AI Proliferation has Entered the Chat

Semiconductor equipment order activity increased to 82 °F last week. AI-related segments like memory and advanced packaging are going strong. Mobile segment is also getting warmer following some positive signs from emerging markets in Q1 2024.

April data is in from Taiwanese companies and was in-line with our forecast. MediaTek reported 48% YoY revenue increase, reinforcing the strong rebound in mobile sales, especially in emerging markets. TSMC reported a 21% QoQ and 60% YoY jump in revenue despite April usually being a sequentially negative month. Besides AI datacenter, the huge push towards on-device AI capabilities has become significant as all new Edge AI chips announced are already in production. AI PCs are expected to take nearly 10% of the PC market share this year and triple next year.

Generative AI is still the highest growth factor for the semiconductor industry exactly 1 year after Nvidia announced their forecast of three-digit growth in AI datacenter revenue. As new multimodal AI are being released this week from OpenAI and Google, it is clear these exciting new AI models will require more native inputs from devices and an increase in computing power as speed and privacy are crucial to the AI user experience. This factor combined with the electronics replacement cycle could boost demand even more in the latter half of this year.