The Evolution of Semiconductor Companies Starts with AI

The semiconductor industry is growing fast and quick with technology based innovation fueling investments in new products. Gartner has predicted that the worldwide semiconductor revenue would reach the figures of $364.1 billion in 2017, an increase of 7.2 percent from 2016. "The worst is now over with a positive outlook emerging for 2017 driven by inventory replenishment and increasing average selling prices (ASPs) in select markets, particularly commodity memory and application-specific standard products," said Ganesh Ramamoorthy, research vice president at Gartner. Now, the biggest challenge in front of companies is to find new ways to design and manufacture products

Driven by the sales in smartphone, automobile and industrial segments, the competition in the world semiconductor market is heating up. Likely to get more exposure are companies who know how to replace traditional growth drivers such as PC and wireless with nimble, accelerated product exploration and development. According to World Semiconductor Trade Statistics (WSTS), the largest growth in 2017 is expected to come from memory (expected growth of 13% y-o-y), sensors (9% y-o-y) and analog (8% y-o-y). Semiconductor providers have already identified application-specific standard products (ASSP) and IoT as the two biggest trends in the industry. And, at the same time are looking to build new delivery models within the organization.

In the evolving world of semiconductor companies, how can the worlds’ largest and highest valued semiconductor chip makers, Intel be far behind. The company has taken some aggressive steps to reinforce its position as a market leader. Intel is now focused on lowering its data center growth estimate. Seeing how the market has undergone a transition, Intel has aimed to elevate its presence in the Artificial intelligence space. A slowing demand for server CPUs and increasing adoption of AI is thought to be a major reason behind the company’s decision to change paths. Gartner has lowered its 2017 worldwide IT (information technology) spending growth from 3.0% YoY (year-over-year) to 2.7% YoY as companies adopt a wait-and-watch approach in the midst of political uncertainty. It expects data center systems spending to rise 2.6% YoY in 2017 and 1.0% in 2018.

Intel’s new move to enter the AI space could potentially reshape the industry. Intel recently acquired deep-learning startup Nervana Systems and is driving efforts to fast-track adoption of AI technologies. With these processors, Intel is looking to compete with Nvidia’s (NVDA) graphics cards in the AI space