TSMC thanks you for your love of AI-powered chatbots
AI is going to be the new driver of growth for the foreseeable future, and the whole chip industry will benefit. Yes, the chatbots' popularity will eb a windfall for TSMC.
Last year's fast uptake of generative artificial intelligence looks set to continue, which is the kind of good news that will convince Taiwan Semiconductor Manufacturing Co. that the worst is over for the global chip sector. All it needs now is for us to keep chatting with bots, create AI-generated cat videos, and let computers write school essays.
Global semiconductor industry revenue will climb at least 10% this year, Chief Executive Officer C.C. Wei told investors Thursday, a turnaround from a 2% drop last year. TSMC will do even better, with full-year growth of more than 20% versus a 9% decline.
A slowing global economy, military conflict in multiple locations, and weaker demand for consumer devices like smartphones and computers hurt the entire industry in 2023. The Taiwanese made-to-order chip foundry couldn't avoid the fallout, despite the buzz that drove sales of the expensive number-crunching chips crucial to AI.
Building AI models and churning out results to user requests are intense tasks. They also burn a lot of electricity, forcing chip designers to come up with more powerful, yet more efficient, semiconductors. TSMC's major clients including Nvidia Corp. and Advanced Micro Devices Inc. head up the competition here, and no rival to TSMC has yet shown they can manufacture the components better.
That means weakness in AI would spell bad news for TSMC.
Dozens of generative AI products have popped up since OpenAI released ChatGPT in November 2022, including websites that can create photos and videos based only on text input. Until now, most of those tasks were undertaken in massive server farms stacked with chips manufactured by TSMC at its factories in Taiwan. This year marks the start of a new phase.
“Generative AI is only in its nascent stage,” Chairman Mark Liu said during the earnings conference. “We have only seen the tip of the iceberg.”
TSMC is betting that more of the AI work will be done directly on consumer devices like smartphones and PCs, the very sectors that slumped last year.
Samsung Electronics Co. offers a good example. The company this week announced it was targeting double-digit growth for its latest flagship phone series, and expects to get there by stuffing the device with artificial intelligence features such as live voice and text translation, and enhanced image search. Apple Inc. is also working on a large-language model, the backbone of text-based generative AI, with a view to bringing advanced features to products like iPhones, Bloomberg News has reported.
Whichever company wants to offer AI, on whatever product, TSMC expects to be there making the needed chips.
Yet TSMC's optimistic outlook extends well beyond the company. A forecast for double-digit industry growth this year indicates there's likely to be many winners, and we can see that in its balance sheet. Stockpiles at the firm fell to 85-days of inventory, the lowest since 2021. That gives us a hint that not only are its own clients ready to start putting in orders for new chips, but the wider sector is in the healthiest shape in more than two years.
Now that inventories are low, and growth has returned, TSMC's robust year ahead is likely to be a bellwether for a strong rebound in the chip sector. On the provision we all keep talking to our devices.
Also read these top stories today:
AI chatbots birth windfall for chipmakers! AI is going to be the new driver of growth for the foreseeable future, and the whole chip industry will benefit. Yes, the chatbots' popularity will be a windfall for TSMC. Read all about it here.
AI paranoia? Leaders at Davos are worried about AI fake news. But they mustn't forget how Facebook and TikTok spread it. Dive in here. Found it interesting? Go on, and share it with everyone you know.
Apple Watch without blood oxygen feature better? Masimo CEO Joe Kiani, waging a legal fight with Apple Inc over a blood oxygen feature on Apple Watch, said that consumers are better off without the iPhone maker's version of the technology. Know all about it here.
Catch all the Latest Tech News, Mobile News, Laptop News, Gaming news, Wearables News , How To News, also keep up with us on Whatsapp channel,Twitter, Facebook, Google News, and Instagram. For our latest videos, subscribe to our YouTube channel.