Global semiconductor market may rebound early on strong AI chip demand

2023.05.26 11:58:01 | 2023.05.26 13:51:29

Nvidia Corp. headquarters in Santa Clara, California, U.S. [Courtesy of Nvidia]이미지 확대

Nvidia Corp. headquarters in Santa Clara, California, U.S. [Courtesy of Nvidia]

U.S. chipmaker Nvidia Corp.’s surprise earnings for the first quarter are raising expectations that the global semiconductor industry could bottom out sooner than expected.

Analysts say that the surge in demand for artificial intelligent applications like ChatGPT is driving demand for data center semiconductors, which in turn could boost the need for memory semiconductors, a field where Korean companies are leading the pack.

Reflecting the growing expectations, shares of Samsung Electronics Co. briefly surpassed 70,000 won ($52.82) for the first time in 14 months on Thursday. SK hynix Inc. also broke the 100,000 won mark for the first time in ten months. Semiconductor-related stocks in Japan and Taiwan also experienced significant gains.

Nvidia, a global leader in the field of high-capacity and high-performance graphics processing units (GPUs) that are highly needed for AI applications, played a role in reigniting hopes for a semiconductor industry revival.

Nvidia announced on Wednesday that its first-quarter revenue ended April 30 fell by 13 percent from a year ago. However, revenue from its data center business that includes AI chip business, increased by 14 percent. Nvidia currently dominates 80 percent of the global GPU market. The company also said that it expects to generate $11 billion in revenue for the second quarter, 54 percent higher than market expectations.

The computer industry is going through two simultaneous transitions ? accelerated computing and generative AI, said Jensen Huang, founder and chief executive officer of the company.

There are also forecasts that Samsung Electronics and SK hynix, two major players in the memory semiconductor market, may struggle to keep up with the overall demand this year. The effects of production cuts by companies have started to show.

Taiwanese market intelligence provider TrendForce predicted that global DRAM supply would reach 104.3 billion units based on 2-gigabit (Gb) chips. This falls short of the total demand forecast of 105.4 billion units.

Following Nvidia’s earnings results, shares of NVIDIA surged by 24 percent in after-hours trading, while Advanced Micro Devices Inc. gained 8.17 percent and Micron Technology Inc. 3.95 percent. In the Japanese market on Thursday, semiconductor equipment company Advantest Corp. jumped more than 16 percent. Taiwan Semiconductor Manufacturing Co.’s stock price also rose by 2.86 percent in Taiwan.

Samsung Electronics and SK hynix concluded Thursday’s session at 68,800 won and 103,500 won, respectively, representing increases of 0.44 percent and 5.94 percent.

By Cha Chang-hee and Minu Kim

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