“AI influences the development of semiconductor sector in two ways: creating demand for new type of technologies and improving the product fabrication process,” said Jian-Hong Lin, research manager of TrendForce.

AI-related demand has spurred the arrival of new solutions in markets ranging from sensors, hardware accelerators, digital storage units and telecommunication services. The establishment of AI-based services has also led to simultaneous upgrading of network infrastructure, data centers and server systems worldwide.

Furthermore, AI-related applications are also driving the average semiconductor content per box for various end devices. Market arrivals of new IC solutions for the emerging applications, together with rising ASPs of mainstream IC products, have been bolstering the revenues of semiconductor makers.

An AI-related application that is witnessing fast-growing semiconductor demand is the automotive market. As car makers invest resources into developing advanced driver assistance systems and electric vehicles, there is an influx of new sensors and controller components that seek to fulfill their specification needs. Another emerging market for new semiconductor products is smart home solutions, which include voiced-based virtual personal assistants based on AI systems.

Besides these relatively new application markets, innovations in mainstream consumer electronic products continue to sustain semiconductor demand. In the case of smartphones, specifications of mobile SoCs have been raised to allow new features such as biometric recognition and to achieve better performances (in terms of computing power, storage, data transfer and etc.). The global top three smartphone brands and major suppliers of mobile SoCs all have offered hard- and software products including AI accelerators ICs and application development kits.

AI is also being introduced into semiconductor fabrication as part of the transformation of manufacturing under the concept of Industry 4.0. With the help of new production models powered by AI systems, semiconductor manufacturers are redefining their efficiency benchmarks for their production capacity plans. The availability of data and the pace of digitalization are going to influence heavily on the competitiveness of individual manufacturers as early as 2018.

The adoption of AI will also move the competition among the major chip producing regions (such as Taiwan, South Korea, the U.S. and China) to a new phase. The semiconductor supply chains within the respective regions will have specific challenges and opportunities on account of their own abilities to work under the AI-driven manufacturing framework.