AI chip market to reach $260B by 2033

The demand for artificial intelligence (AI) chips, needed to fully tap into the technology’s potential, will grow exponentially over the next decade.

There’s a good reason why NVIDIA’s valuation has surpassed $1 trillion – the company is providing the chips that are crucial for training different AI applications. Eric Lynch, Managing Director of Scharf Investments, recently said that NVIDIA was basically selling shovels – a shrewd comparison to the Gold Rush era with chips as the irreplaceable tools needed to unlock AI’s vast potential.

According to a recent report by the market research company IDTechEx, the global AI chip market will grow to $257.6 billion in just ten years, with “IT & Telecoms, BFSI (Banking, Financial Services and Industrial), and Consumer Electronics industry verticals leading the way in terms of revenue generated.”

As per the report, the need for AI chips capable of handling machine learning (ML) workloads will only increase – the compound annual growth rate (CAGR) is expected to stand at 24.4%.

Ever since the chip shortage crisis in 2020, actors like the US, South Korea, Taiwan, Japan, China, and the European Union have sought to reduce their exposure to a manufacturing deficit by confirming investments into semiconductor facilities.

In regards to AI chips, the talk still pretty much revolves around NVIDIA. However, there might be a new sheriff in town. Just last week, AI startup MosaicML, owned by DataBricks, said it had tested its AMD MI250 chip against NVIDIA’s A100 and discovered that their chip could already achieve 80% the performance of the NVIDIA chip.