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AI and Semiconductor Industry Trends in 2024: Analysis of Major Companies and Technologies

GOOVER DAILY REPORT July 29, 2024
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TABLE OF CONTENTS

  1. Summary
  2. AI Adoption in the 2024 Paris Olympics
  3. Competitive Landscape in AI PCs
  4. Stock Market Fluctuations Affecting Tech Giants
  5. Developments in Server CPUs and AI Data Centers
  6. Global Semiconductor Industry Trends
  7. AI and Semiconductor Market Analysis
  8. NVIDIA's Market Performance and AI Leadership
  9. AI Technology Trends and Market Dynamics
  10. Big Tech Stock Market Trends
  11. Conclusion

1. Summary

  • The report titled 'AI and Semiconductor Industry Trends in 2024: Analysis of Major Companies and Technologies' delves into the current trends in the AI and semiconductor sectors, profiling key entities such as NVIDIA, Google, Intel, AMD, and TSMC. It covers diverse topics, including the integration of AI at the 2024 Paris Olympics, the competitive landscape of AI PCs, stock market fluctuations affecting technology giants, and advancements in server CPUs and AI data centers. Significant findings highlight Google’s AI interactions in the Paris Olympics, stock volatility influenced by geopolitical tensions, and the competitive entry of AMD and Intel into the AI PC market, emphasizing the rapid evolution and strategic moves made by leading companies in these industries.

2. AI Adoption in the 2024 Paris Olympics

  • 2-1. Google's AI Technology Integration

  • Google plans to integrate its AI technology called 'Gemini' during the 2024 Paris Olympics. Serving as the official AI sponsor for the U.S. team, Google will collaborate with NBCUniversal to introduce various AI-driven features for more innovative broadcasting. For instance, AI will provide detailed information related to the games, and utilize services like 3D and Immersive Views in Google Maps to present information about the venues.

  • 2-2. Big Tech Performance and Stock Fluctuations

  • The New York Stock Exchange faced declines, influenced by rising interest rates and profit-taking sales. On July 18, the Dow Jones dropped 582 points (1.41%), the S&P 500 fell 62 points (1.12%), and the Nasdaq decreased by 221 points (1.23%). Meanwhile, the stock prices of major tech companies showed mixed results. NVIDIA rose by 1.3%, Meta by 2.5%, and Intel by 0.5%, whereas Apple fell by 2.1%, Tesla by 0.2%, AMD by 3.1%, Amazon by 2.4%, Alphabet (Google's parent company) by 2.2%, Netflix by 0.6%, Coinbase by 7.1%, and ARM by 4.2%.

  • 2-3. Impact on Semiconductor Stocks

  • Semiconductor stocks were notably affected due to anticipated U.S. export restrictions to China. In the U.S., NVIDIA saw a 1.3% rise by the end of the day. However, AMD dropped by 3.1%, Micron by 6.27%, Broadcom by 7.91%, and Qualcomm by 8.61%. In South Korea, Samsung Electronics decreased by 2.88%, SK Hynix by 3.63%, and Hanmi Semiconductor by 5.65%.

3. Competitive Landscape in AI PCs

  • 3-1. SK Telecom's AI Tag Implementation

  • SK Telecom has introduced a new 'AI Tag' feature for the PC version of Chat+, enabling users to easily distinguish between different types of messages. This is part of their effort to extend the user experience in messaging services. This feature rollout comes amid a recovering PC market, which had seen a dip post the COVID-19 pandemic.

  • 3-2. AMD and Intel's Upcoming AI Processors

  • The PC market is experiencing a resurgence, driven by the global demand for AI-enhanced products, leading to the rise of so-called 'AI PCs'. Notably, AMD and Intel are entering the AI PC arena with their upcoming processors, Ryzen AI 300 and Lunar Lake, respectively. While these new processors are anticipated to boost AI PC demand, there is notable competition from other chip manufacturers like Qualcomm. Market analyst William Lee from Counterpoint Research projects that the second half of 2024 will be a 'battlefield' for AI PCs with Intel and AMD as leading manufacturers but facing challenges from new players in the market.

  • 3-3. Challenges and Progress in On-Device AI

  • Despite advancements, AI PCs currently require online connectivity to fully leverage generative AI functions, indicating that they are not yet fully equipped for on-device AI operations. However, the upcoming next-generation chipsets promise significant improvements in AI performance. The 'Copilot+ PC' specifications set by Microsoft aim to mark the beginning of a new era for AI PCs. Nevertheless, the current first-generation AI PC processors fall short in achieving adequate performance to receive Copilot+ PC certification.

4. Stock Market Fluctuations Affecting Tech Giants

  • 4-1. NVIDIA's Stock Performance

  • According to CityTimes, NVIDIA's stock price experienced a significant decline, falling by nearly 7% on July 24, 2024. This drop contributed to the 5.41% decrease in the Philadelphia Semiconductor Index, which closed at 5105.65 points. NVIDIA's stock price closed at $114.25, down 6.80%, with a market cap of $2.81 trillion, falling below the $3 trillion mark. The decline was attributed to a broader sell-off in tech stocks triggered by Tesla's disappointing quarterly earnings, which led to a 12.33% drop in Tesla's stock price.

  • 4-2. Philadelphia Semiconductor Index

  • The Philadelphia Semiconductor Index saw a significant drop of 5.41% on July 24, 2024, closing at 5105.65 points. This decline was influenced by the broader tech stock sell-off that affected several semiconductor companies. NVIDIA's nearly 7% drop played a significant role in this decline. Other semiconductor companies such as AMD (-6.08%), Intel (-3.70%), Micron (-3.47%), TSMC (-5.90%), and Broadcom (-7.50%) also experienced notable declines, contributing to the overall drop in the index.

  • 4-3. Impact of Tesla's Performance on Tech Stocks

  • Tesla's performance had a notable impact on tech stocks, including semiconductor companies. On July 24, 2024, Tesla's quarterly earnings failed to meet market expectations, leading to a 12.33% drop in its stock price. This triggered a broader sell-off in tech stocks, affecting companies like NVIDIA, AMD, and Intel. According to CityTimes and other reports, the sell-off was driven by concerns over the sustainability of the AI boom and broader market instability. The Nasdaq Index itself saw a significant drop of 3.64%, its largest decline in 2 years and 9 months, highlighting the volatility and uncertainty in the tech sector.

5. Developments in Server CPUs and AI Data Centers

  • 5-1. Microsoft, Google, and AWS Server CPUs

  • Microsoft, Google, and AWS have made significant strides in the development of server CPUs. Microsoft's 'Cobalt100', introduced at the annual developer conference 'Build' in May 2024, is ARM-based and offers 128 processor cores, delivering 40% better performance compared to existing CPUs. Adobe and Snowflake currently utilize Cobalt100. Google Cloud unveiled its first server CPU, 'Axion', at a tech conference in April 2024. Axion outperforms Intel's 'x86' CPUs by 50% and boasts 60% better energy efficiency. Google's aim with Axion is to enhance performance while reducing costs. AWS has been using ARM-based server CPUs since 2018, with their latest addition, 'Graviton4', optimizing performance, cost, and power efficiency for data center operations.

  • 5-2. Trends in Cloud-Based Data Center Operations

  • The landscape of cloud-based data center operations is rapidly evolving. Big tech companies are increasingly favoring Ethernet over InfiniBand due to cost efficiency and scalability. Ethernet-based infrastructure can be built at 50% of the cost of InfiniBand. Microsoft’s supercomputer, equipped with specialized AI semiconductors, likely adopts Ethernet, reflecting a broader industry trend. Oracle is helping major enterprises transition from on-premises data centers to cloud-based operations using Oracle Cloud Infrastructure (OCI). For instance, Ahold Delhaize moved its applications and IT systems to the cloud, maintaining control over its VMware environment while completely eliminating physical data center space.

  • 5-3. Global Semiconductor Talent Competition

  • The competition for skilled talent in the semiconductor industry is intense globally. Leading companies such as Intel, Nvidia, TSMC, Samsung, and SK Hynix are actively recruiting large numbers of new and experienced professionals. In July 2024, both Samsung and SK Hynix embarked on substantial hiring sprees, driven by favorable semiconductor market conditions and rising demand for AI semiconductors. However, there's a notable trend of high-quality local talent moving overseas for better salaries and job opportunities, posing a challenge for domestic firms in maintaining their competitive edge.

6. Global Semiconductor Industry Trends

  • 6-1. Quarterly Performances of TSMC, NVIDIA, and AMD

  • In 2024, major companies in the semiconductor industry have seen varied quarterly performances. NVIDIA, known for its AI chips, recently surpassed Microsoft and Apple to become the world's most valuable publicly traded company. TSMC (Taiwan Semiconductor Manufacturing Company Limited) also made significant strides by becoming the first Asian company to reach a market capitalization of $1 trillion as of June 20, 2024. Although TSMC's market cap has since slightly reduced to $859.7 billion, it stands as a strong indicator of the company's quiet but robust growth, largely owing to its extensive portfolio of technology and manufacturing clients, which include Apple, AMD, Intel, and NVIDIA.

  • 6-2. Impact of US Export Restrictions

  • The semiconductor industry has faced considerable fluctuations due to US export restrictions on Chinese tech companies. Companies like TSMC, AMD, Broadcom, and Qualcomm have all seen significant stock price declines, with the Philadelphia Semiconductor Index dropping by 4.8% as of July 18, 2024. The US government has been tightening its technological grip, considering expanded measures under the Foreign Direct Product Rule (FDPR) to limit China's access to advanced semiconductor technologies.

  • 6-3. 3nm Technology and AI Investment Warnings

  • Technological advancements and investments in 3nm semiconductor technology continue to play a critical role in the industry. TSMC is poised to benefit significantly from the ongoing AI boom, with demand for advanced chips rising. However, the market also signals warnings of potential semiconductor bubbles, as seen in the recent drastic stock price drops of major players like NVIDIA and AMD. As per reports, semiconductor stocks have been particularly volatile due to increased market speculation and geopolitical tensions.

7. AI and Semiconductor Market Analysis

  • 7-1. Samsung and SK hynix's Advancements

  • Samsung and SK hynix are making significant strides in semiconductor technology. Samsung Electronics recorded its highest quarterly operating profit since Q3 2022, with a consolidated operating profit of 10.4 trillion KRW in Q2, marking a 1452% increase year-on-year. This success is attributed to the rise in memory semiconductor prices and the booming AI industry, which bolstered memory semiconductor sales. Additionally, the delivery of HBM3E products and organizational restructuring had positive impacts. SK hynix, focusing on HBM technology development and AI market expansion, has also seen a recovery in performance. The company started mass production of HBM3E 8-layer products in March this year and plans to begin HBM3E 12-layer production in Q3. Collaboration with NVIDIA and TSMC has been pivotal in these ventures.

  • 7-2. Saltlux's AI Search Engine 'Guber'

  • Saltlux has introduced the AI-based search engine 'Guber,' which utilizes the company's AI model 'Lucia2.' 'Lucia2' has double the training data compared to its predecessor and was launched simultaneously in the U.S. and South Korea. Guber employs Connectome and Graph RAG technologies to provide customized information and automatically generate in-depth reports. The initial market response has been positive, with high praise for its customized information provision and automated report generation capabilities. Saltlux aims to secure a foothold in the global search market, targeting a 120 billion USD market with a strong AI agent function capable of exploring web information in various languages.

  • 7-3. Impacts of the US-China Trade War

  • The ongoing US-China trade war has significantly impacted the semiconductor market. On July 18, 2024, the New York Stock Exchange witnessed signs of a semiconductor bubble bursting, causing sharp declines in the stock prices of companies like NVIDIA, Tesla, and Bitcoin. This was primarily triggered by former President Trump's statements about tightening regulations on Chinese semiconductors and potential trade restrictions on U.S. allies. The news led to significant drops in TSMC, AMD, Broadcom, Qualcomm, and Micron Technology stocks, with the Philadelphia Semiconductor Index falling by 4.8%. The market remains volatile, with ongoing geopolitical tensions influencing investor sentiment and stock market stability.

8. NVIDIA's Market Performance and AI Leadership

  • 8-1. Global Market Growth and AI Technology Leadership

  • NVIDIA has significantly grown its global market presence and has become a leader in AI technology. From early 2023, its stock price rose dramatically, reaching $135.6 per share by June 18, 2023, up from $9.5 per share. This growth elevated NVIDIA's market cap to $3.335 trillion, surpassing both Microsoft ($3.32 trillion) and Apple ($3.29 trillion). Jensen Huang, CEO of NVIDIA, saw his wealth increase to $11.7 billion, ranking him as the 11th richest billionaire globally. The surge in AI technology development, particularly with the success of OpenAI's ChatGPT, led to a massive demand for NVIDIA's GPUs, securing them an 80% market share in the GPU segment.

  • 8-2. Data Center Market Innovations

  • NVIDIA has made significant inroads into the data center market. Initially focusing on video game console semiconductors, NVIDIA transitioned to data centers by releasing data center GPUs in 2012. These innovations supported complex computing tasks such as oil and gas exploration and weather forecasting. During the COVID-19 pandemic, the demand for remote work solutions further increased NVIDIA's data center revenues, which began to surpass its gaming revenue by the 2023 fiscal year.

  • 8-3. Collaborations with OpenAI and Others

  • NVIDIA has collaborated closely with leading AI developers like OpenAI. The partnership with OpenAI to develop ChatGPT, which uses NVIDIA GPUs, significantly boosted NVIDIA’s profile and stock price. The success of ChatGPT created a high demand for NVIDIA GPUs among major tech firms, enhancing NVIDIA's market position. These GPUs have been crucial in training large language models (LLMs) and other AI applications, solidifying NVIDIA’s leadership in the AI hardware sector.

9. AI Technology Trends and Market Dynamics

  • 9-1. AI and MLCC/CXL Technology

  • This subsection details the current trends and developments in MLCC and CXL technologies, focusing on the roles played by Samsung Electro-Mechanics and Samsung Electronics. As AI servers and laptops' demand increases, so does the need for high-capacity MLCCs, which are crucial for maintaining stable electric currents in circuits. The report highlights that Nvidia's GB200 server and ARM-based Windows AI laptops drive up the MLCC demand and their Average Selling Price (ASP). Samsung Electro-Mechanics anticipates revenue growth due to this surge in demand, holding 40% of its total revenue from the MLCC business. Significant competition in the MLCC market comes from Japanese companies like Murata, TDK, and Taiyo Yuden, with Samsung Electro-Mechanics enhancing its competitive edge through next-generation products such as silicon capacitors. Furthermore, the report outlines the collaboration between Samsung Electro-Mechanics and AMD to supply high-performance semiconductor substrates (FC-BGA) for AI data centers. This strategic move positions Samsung Electro-Mechanics as a key player in the hyperscale data center market, previously dominated by Japanese and Taiwanese companies. Financial forecasts from NH Investment & Securities and FnGuide indicate promising growth for Samsung Electro-Mechanics in the latter half of 2024.

  • 9-2. AI Impact on Memory Semiconductor Market

  • The report elaborates on the significant impact of AI on the memory semiconductor market, with a particular focus on Compute Express Link (CXL) technology. CXL, a next-generation memory technology, enhances data processing speeds by efficiently linking various devices like CPUs, GPUs, and storage units. Samsung Electronics has been at the forefront, developing the industry's first CXL-based DRAM in 2021, and later introducing 512GB and 256GB CMM-D products. These innovations help in reducing data bottlenecks and operational costs in data centers. The CXL market is projected to grow from 1.7 million dollars in 2022 to 15.8 billion dollars by 2028, with CXL DRAM expected to make up 70-80% of this market. Despite losing ground in the HBM market, Samsung aims to establish a strong foothold in the memory semiconductor market through its CXL technology.

  • 9-3. Collaborations and Technical Innovations

  • This subsection discusses significant collaborations and technological advancements in the AI and semiconductor industries. One of the notable mentions is Samsung Electronics' dual-track strategy using its AI assistant 'Bixby' and Google's 'Google Assistant'. This approach leverages the strengths of both AI assistants, with Bixby focusing on on-device control and Google Assistant on cloud-based services. In addition, the report highlights OpenAI's partnership with Broadcom and TSMC for AI chip development, reflecting efforts to overcome GPU shortages and enhance AI capabilities. Another significant collaboration is between Samsung Electro-Mechanics and AMD, focusing on supplying high-performance substrates for hyperscale data centers. Such collaborations underscore the trend of integrating advanced AI technologies with memory and computing innovations, driving substantial growth and transformation in the sector.

10. Big Tech Stock Market Trends

  • 10-1. Tesla's Impact on Stock Fluctuations

  • Tesla experienced significant stock fluctuations due to the delay in the release schedule of its robotaxi and Elon Musk's endorsement of Donald Trump. Initially, the stock plummeted over 8% as the release was postponed from the original date, halting an 11-day rally. However, Elon Musk's public endorsement of Trump and his financial support to a Trump-backed organization led to a stock rebound, climbing 6.44% over three days. Additionally, Tesla's Q2 vehicle deliveries and energy storage sales exceeded market expectations, contributing to an 11-day stock surge of 44.18%.

  • 10-2. Performance of US and South Korean Tech Stocks

  • In the US, major indices like the Dow Jones, S&P 500, and Nasdaq saw declines of 1.41%, 1.12%, and 1.23%, respectively, due to a rise in profit-taking and increased US Treasury yields. NVIDIA, Meta, and Intel stocks rose by 1.3%, 2.5%, and 0.5%, driven by heightened demand in the semiconductor sector. Conversely, prominent tech stocks like Apple, AMD, and Amazon saw declines, influenced primarily by profit-taking and rising Treasury yields. Meanwhile, TSMC reported robust quarterly results, leading to a stock increase. In South Korea, the KOSPI dropped 0.56%, affected by declines in the US market and foreign investor sales. Prominent losers included Samsung Electronics and LG Energy Solution, while pharmaceutical and biotech stocks saw gains due to favorable regulatory news.

  • 10-3. New York Stock Exchange and Kospi Index

  • The New York Stock Exchange experienced declines in key indices due to increased profit-taking linked to rising US Treasury yields. The Dow, S&P 500, and Nasdaq fell by 1.41%, 1.12%, and 1.23%, respectively. TSMC's stock rose following better-than-expected earnings, while major players like Apple and Tesla saw declines due to profit-taking. The South Korean KOSPI index also fell by 0.56%, influenced by the US market's performance and a shift to selling by foreign investors. Stock declines in tech giants such as Samsung Electronics and LG Energy Solution, combined with investor caution about upcoming earnings reports, contributed to this dip. However, pharmaceutical and biotech stocks in South Korea posted gains owing to favorable developments in the US.

11. Conclusion

  • In summary, the report elucidates the significant headway and ongoing challenges within the AI and semiconductor industries as of 2024. Key discoveries show substantial developments such as AI's role in global events like the Paris Olympics, the evolving competitive scenario of AI PCs with new processors from AMD and Intel, and the fluctuations in tech stock prices partly due to geopolitical tensions like the US-China trade war. Companies like NVIDIA, Google, and TSMC are pivotal in driving industry innovation and maintaining market growth. However, the report also points out limitations such as market volatility and geopolitical uncertainties, suggesting that these factors might impact future technological advancements and market stability. Looking ahead, continued strategic investments and innovation will be crucial, alongside navigating geopolitical complexities to sustain growth and leverage AI's potential in various sectors.

12. Glossary

  • 12-1. NVIDIA [Company]

  • NVIDIA is a leading AI semiconductor company known for its graphics processing units (GPUs) and contributions to AI technology. It has demonstrated significant market influence through its innovative products and strategic investments in AI and data centers.

  • 12-2. AI PC [Product]

  • AI PC refers to personal computers equipped with AI processors and memory, driving competitive advancements in the PC market. Companies like AMD and Intel are developing new AI processors to meet this growing demand.

  • 12-3. TSMC [Company]

  • TSMC is a leading semiconductor manufacturing company known for producing advanced chips used in AI applications. It has experienced significant market growth, partly driven by the AI boom and high demand for semiconductor chips.

  • 12-4. Big Tech [Group]

  • Refers to major technology companies like Google, Microsoft, and Amazon. These companies are heavily investing in AI and semiconductor technologies to improve performance and drive innovation in the tech industry.

13. Source Documents