The next great chip shortage could be caused by the rapid growth in Artificial Intelligence (AI) platforms, services, and user adoption. A new report has warned that high-intensity and processor-hungry AI-optimized hardware could gobble up production.
AI could cause the next chip shortage
Semiconductors, the heart of any chip, are fast becoming a highly valued commodity. The last scarcity of these semiconductors happened during the Covid-19 pandemic.
The previous chip shortage occurred primarily due to widespread disruption in supply chains. As industries couldn’t function at their peak capacities, demand far exceeded supply leading to high wait times and delays.
A new report has warned that a similar chip shortage could be looming around the corner. According to a report released by consultancy Bain & Company, AI would be the primary reason behind the predicted scarcity.
There’s a high demand for AI-optimized semiconductors, and AI-enabled smartphones and laptops. Tech giants have been gobbling up AI chips for quite some time. Most of the big companies involved in the tech sector have booked NVIDIA’s chip production for the next several months.
GPUs are the workhorse in the AI world. Companies use GPUs to train huge AI models. Similarly, Qualcomm and other chip makers are actively producing AI chips that go into smartphones and personal computers. Hence, companies like Samsung and Microsoft are aggressively promoting and introducing AI-enabled devices.
Geopolitics could be a contributing factor to the looming crisis
AI is the primary driving force behind the insatiable demand for semiconductor chips in recent times. GPUs, and other relevant hardware, need billions of semiconductors.
Chipmakers are trying to meet the demand by building new factories. These efforts may or may not fall short in the short term, potentially resulting in demand outpacing supply. However, there’s another, far more concerning factor, the report indicated.
The semiconductor supply chain is currently streamlined. However, it is spread across multiple countries around the world. For example, a chip designed by NVIDIA in the US could be fabricated in a TSMC foundry located in Taiwan. TSMC too needs companies located around the world.
Multiple reports have cautioned that China could make a move on Taiwan under the controversial “One China” policy. Meanwhile, the US is actively pushing domestic chipmakers such as Intel to bolster capacity and ward off the looming chip shortage. Simply put, the rising uncertainty in geopolitics could play a key role in the chip shortage, the report cautioned.
