A SURGE in demand for artificial intelligence (AI) and a steady rise in automotive chips will help propel a rebound in global chip sales this year, according to an industry group’s annual sales data released on Monday (Feb 5).

The Semiconductor Industry Association (SIA) forecast a 13.1 per cent jump in global chip sales to US$595.3 billion, compared with a drop of about 8 per cent in sales in 2023.

“AI is a super strong market – I think of you look across the landscape, there’s a lot of positive things to look at,” SIA chief executive John Neuffer told Reuters in an interview.

Despite a slow start to the year for auto chips, that slice of the chip market is still expected to grow 6 per cent, according to Robert Casanova, SIA director of industry statistics and economic policy.

Last year, weak demand for PCs and smartphones punished chipmakers like Intel and Qualcomm, partially contributing to a 1.1 per cent increase in sales of so-called “logic” chips to US$178.5 billion. Memory sales plunged 29 per cent to US$92.3 billion and was the second largest category tracked by the SIA.

But this year, the frenzy among tech giants to deliver products and services that deploy AI triggered a surge in demand for the advanced chips produced by Nvidia, as cloud computing companies seek to build more capacity to run such software.

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AI applications require large quantities of graphics processing units (GPUs) strung together, and a range of other types of chips around them to achieve the performance necessary. AI systems need massive amounts of high-bandwidth memory made by SK Hynix and speedy networking processors to move data between. REUTERS