AI Chip Revenue Expected to Soar: Gartner Predicts $120B by 2027
Artificial intelligence (AI) is continuing to reshape industries across the globe, and as a result, the demand for AI chips is skyrocketing. According to a new study from Gartner, revenue generated by chips designed specifically for AI work is projected to reach $53.4 billion this year, representing a 21% increase from the previous year. This growth is largely driven by advancements in the generative AI segment, a highly popular area of development.
Gartner forecasts that the revenue from AI chips will accelerate even further in the coming years, reaching $67.2 billion in 2023 and nearly doubling to almost $120 billion by 2027. These figures indicate the exponential growth of AI technology and its increasing integration into various industries.
The consumer electronics market is also set to experience a surge in AI-enabled application processors. Analysts estimate that the value of these processors, which are used in devices, will more than double annually to $1.2 billion by the end of this year. This rapid growth is driven by the adoption of AI-based workloads in multiple industries and IT organizations as they strive to enhance their operations and improve efficiency.
As AI-based workloads continue to mature, Gartner predicts that there will be a greater need for custom-designed AI chips to support cost-effective execution. This demand for efficient and optimized designs will result in an increase in the deployment of these specialized chips. This trend is further exemplified by the significant investments pouring into generative AI start-ups, which received over $4.2 billion in funding between 2021 and 2022.
The potential of AI technology has already been recognized by major players in the semiconductor industry. Nvidia, a leading chip manufacturer, has seen its share price surge by approximately 174% in the past year, driven partly by its entrance into the generative AI market. Similarly, SoftBank Group’s British semiconductor unit, Arm, aims to target customers that develop chips for data centers, a sector increasingly integrating AI capabilities. This strategic move demonstrates the growing importance of AI technology in the semiconductor industry.
Gartner has identified generative AI as an overhyped technology, currently in the inflated expectations stage. However, the research firm acknowledges its potential to transform industries and drive innovation within the next two to 10 years. This optimism is supported by the increasing deployment and utilization of high-performance graphics processing units (GPUs) and optimized semiconductor devices to meet the demands of generative AI and other AI-based applications.
Furthermore, Gartner predicts that hyper-scale companies will seek cost-effective ways to deploy AI applications, leading to an increase in the use of custom-designed AI chips in the long term. This trend aligns with the growing demand for high-performance computing systems and networking equipment from semiconductor vendors who recognize the potential for significant benefits.
In conclusion, the revenue generated by AI chips is expected to experience remarkable growth in the coming years, driven primarily by advancements in generative AI. The integration of AI technology into various industries will fuel this growth, with consumer electronics being a key sector. As the demand for AI-based workloads continues to mature, the need for custom-designed AI chips will rise, paving the way for further innovation and transformation. The semiconductor industry is already capitalizing on this potential, positioning itself to meet the increasing demand for AI chips.
