nvidia's potential AI smartphone boom
Santa Clara, Friday, 27 December 2024.
NVIDIA may see a boost from rising demand for AI smartphones in 2025. This trend could balance out the slowing demand for data center chips. Advantest’s CEO, Doug Lefever, highlights AI smartphones as a new growth avenue for the semiconductor industry. Large tech companies continue to invest in AI, though data center investments show signs of slowing. The market for AI smartphones is currently small, but experts predict significant growth. Samsung and Google are among companies investing in AI technology for their smartphones. By 2027, AI features could be in 45% of smartphones, totaling 635 million units. While some analysts are cautious, Lefever is optimistic about the potential. A breakthrough AI application could drive massive consumer interest and market expansion. The semiconductor industry could rely on AI smartphones to counteract any downturns in data center investments.
Market shift and growth prospects
NVIDIA faces a potential shift in its market dynamics as AI smartphone demand emerges as a new growth driver. According to Advantest CEO Doug Lefever, while major tech companies like Meta, Google, and Microsoft maintain strong AI investments, their data center spending shows signs of deceleration [1][3]. The semiconductor industry could experience significant cyclical fluctuations, with Lefever warning of potentially severe downturns if not balanced by new growth sectors [1].
Samsung leads AI smartphone push
Samsung has taken the initiative in the AI smartphone market with three new models launched on December 27, 2023: the S24, S24 Plus, and S24 Ultra, priced between $800 and $1,300 [1][3]. These devices feature AI capabilities including real-time translation, voice recording transcription, and advanced photo editing. Other manufacturers including Google, Honor, OPPO, and Xiaomi are also developing AI smartphone technologies [3].
Market projections and challenges
Market research firm Canalys projects significant growth in AI-capable smartphones, estimating that 5% of smartphone shipments will feature AI capabilities in 2024, expanding to 635 million units by 2027, representing 45% of the market [1][3]. However, analyst Park Kang-ho from Daishin Securities cautions that current AI features may not sufficiently motivate widespread device upgrades [1][3].
Supply chain implications
The potential AI smartphone boom has already impacted the semiconductor supply chain. Advantest, a key NVIDIA supplier and semiconductor testing equipment manufacturer, has seen its stock price surge over 80% in 2023 [3]. The company projects a 16% increase in net profit for fiscal year 2024, reaching 122 billion yen [3]. Testing requirements for advanced chips have increased significantly, with modern chips requiring 10-20 tests during production [1].