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Business News/ Ai / AI chip demand to surge by a third with AI adoption across all devices
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AI chip demand to surge by a third with AI adoption across all devices

Gartner predicts data centre demand for AI chips to increase at 12% CAGR to $33 billion by 2028.

Industry analysts and stakeholders expect AI adoption to accelerate further with rising demand for AI tools in data centers worldwide, as well as greater adoption of AI-enabled devices by consumers. (Reuters)Premium
Industry analysts and stakeholders expect AI adoption to accelerate further with rising demand for AI tools in data centers worldwide, as well as greater adoption of AI-enabled devices by consumers. (Reuters)

Mumbai: The rapid integration of artificial intelligence across consumer and enterprise sectors is expected to propel a 33% increase in net global AI semiconductor revenue in 2024.

According to a report from market researcher Gartner released on Thursday, revenue from chipmakers specializing in AI-specific compute processors is expected to grow by 32.8% to $71.25 billion by December.

How will AI adoption accelerate further?

Echoing the findings of the report, industry analysts and stakeholders also expect AI adoption to accelerate further with rising demand for AI tools in data centers worldwide, as well as greater adoption of AI-enabled devices by consumers. 

In data centers alone, AI chip adoption is projected to generate $21 billion in revenue in 2024, growing further at a compound annual rate of nearly 12% to reach $33 billion by 2028.

Also Read: AI and clean energy: Prepare for the global economy that's emerging

Moreover, the consumer electronics industry is set to contribute to this growth, driven by the steady rise in AI-specific chips used in personal computers. This trend is expected to continue over the next three years, the report said.

Gartner's analysis indicates that 'AI PCs', including desktops and laptops equipped with dedicated chips for AI tasks, will account for just over one-fifth of all new desktop and laptop sales worldwide this year.

“By the end of 2026, 100% of enterprise PC purchases will be an AI PC," the report said, highlighting the potential impact of Microsoft’s announcement on the launch of AI PCs earlier this month.

On 20 May, Microsoft CEO Satya Nadella introduced 'Copilot+ PCs', a set of specifications mandating brands to incorporate chips with dedicated neural processors to enhance new features available on Microsoft’s Windows operating system. 

Also Read: India well positioned to leap ahead of developed worlds with AI: Sundar Pichai

Starting with Qualcomm's Snapdragon X Elite series of processors, the new chips will provide over 40 trillion operations per second (TOPS) of AI computing power for each PC, which in turn, is expected to drive an increase in demand for AI semiconductors.

Besides, automotive firms are also projected to contribute $7.1 billion in AI chip revenue this year, propelled by the growing demand for assisted driving technologies and next-generation software experiences in vehicles.

India, too, is poised to make a significant impact. For instance, Mumbai-based Hiranandani Group-backed Yotta Data Services has placed an order for 16,000 graphic processing units (GPUs) from Nvidia to address the growing demand for cloud-based AI development and applications.

Also This: India poised for stronger growth over next decade amid AI, climate risks: RBI

Furthermore, the company was one of the early adopters in India to procure Nvidia's latest Blackwell GPUs—in a bid to power a large-scale AI cloud computing platform that can help train large language models (LLMs).

In the consumer market, however, adoption of AI-first PCs may take a while considering that AI PCs are likely to be available at a higher price point, said Navkendar Singh, associate vice-president at market researcher IDC India. “The shipment uptick will happen driven by enterprises, and will reflect in the PC economy’s revenue by next year," he added.

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ABOUT THE AUTHOR
Shouvik Das
Shouvik Das reports on AI, gaming, IT services, science, space and technology policy for Mint. He also writes on consumer technologies and tech-driven cultural experiences for Lounge, Mint's weekend supplement. Every week, he hosts an irreverent weekly podcast, Techcetra. Beyond work, he is passionate about food, music, sports and travel, and is also a hobbyist photographer.
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Published: 30 May 2024, 09:30 PM IST
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