Not all chip firms are benefiting from the boom in artificial intelligence, earnings show, underscoring the complexities of the semiconductor supply chain and dominance of some companies over others in different parts of the sector.
Companies like Nvidia and AMD are benefiting from companies training AI models, while chip manufacturers such as TSMC have also received a boost. However, Arm and Qualcomm, which still have little exposure to AI, have not seen the huge bump in revenue like other companies have.
Tech giants training large language models require huge amounts of computing resources and data, which has been a huge boost for Nvidia because the company’s graphics processing units are used to train these models. AMD is also benefiting from this trend with its MI300X AI chip.
Chip manufacturing and tool companies appear to be benefiting too from the boom in AI, with TSMC reporting a 36% year-on-year increase in net profit and ASML seeing a 24% year-on-year jump in bookings. Samsung also reported a massive 1,458.2% year-on-year increase in operating profit.
However, not all semiconductor firms have been lifted by the growth of AI investment because their exposure to the technology is currently much less significant at this stage of its development. Qualcomm and Arm saw their share price fall on Wednesday after issuing light guidance for the current quarter, as they still have limited exposure to AI.
Arm designs blueprints that many companies base their chips on, but most of its revenue comes from consumer electronics rather than data centers where AMD and Nvidia have found success. Similarly, Qualcomm makes most of its revenue from handsets and does not have a significant presence in the type of data centers where AI training is taking place.
Source: https://www.cnbc.com/2024/08/02/why-not-all-chip-firms-are-benefitting-from-the-ai-boom-like-nvidia.html