Inside the Rapid Growth of the AI Chip Market

By Elijah Labby Monday, November 30, 2020

What comes to your mind first when you think about artificial intelligence (AI)? If you’re like most people, it’s probably the image portrayed in popular media like “Ex Machina,” “A.I.,” or “Her” — that of a sentient, often threatening, humanoid creature that appears beyond the understanding of man.

However, when it comes to the reality of AI, the story couldn’t be more different. This booming market is giving rise to innovations that have the power to make all of our lives simpler and automate tasks that would take a normal human many lifetimes to complete.

But the growth of this industry could not be possible without the surge of the chipsets market that makes AI possible.

Chipsets may seem complicated to understand, but their role in AI is quite simple. Think of chipsets as the air traffic control of the computer. Chipsets determine which components are compatible with the other components, handle computer processes, and keep everything flowing smoothly. And the market for these chipsets is growing rapidly. From this year to 2026, the worldwide market for AI chipsets is expected to grow from $7.3 billion to $57.8 billion — a compound annual growth rate (CAGR) of 40.1%. Greater computer power, more AI-driven applications, and a greater desire for machine learning technology are all driving the desire for chipsets.

Applications of AI Across the World

The growth of the AI market could not have happened without its many applications.

One of these applications is within government bureaucracy, where Ellery Taylor, Acting Director of the Office of Acquisition Management and Innovation Division at the US General Services Administration, says inefficiencies and inaccuracies can be reduced by the use of AI.

“Federal agencies today are very excited about adopting AI in many of the applications and processes within their organization,” Taylor told Forbes. “AI promises to generate efficiencies, saving time and dollars for the taxpayer.”

But the governmental use of AI will undoubtedly have broader, more significant implications. The growing chasm in US-China relations is perhaps exemplified nowhere better than in the arena of AI, where experts believe China’s technological advancements will soon eclipse the United States’s.

One expert, Eric Schmidt, chairman of the National Security Commission on Artificial Intelligence and former CEO at Google, sees the rise of Chinese AI as a bellwether for Chinese "high tech authoritarianism."

In an article titled “Artificial Intelligence Cold War on the horizon,” Schmidt told POLITICO that the United States needs to do "whatever it takes” to beat China in the race for superior AI. He said that even consumer-grade AI has the potential to be “used for cyber war.”

Other experts say that this race constitutes what amounts to a burgeoning Cold War and that the United States would do well to partner with allies to hasten development.

“Many commentators in Washington and Beijing have accepted the fact that we are in a new type of Cold War,” said Ulrik Vestergaard Knudsen, deputy secretary-general of the Organization for Economic Cooperation and Development in an interview with POLITICO. “...We should not abandon hope of joining forces globally.”

Consumer AI Applications

The most commonly-encountered use of consumer-grade AI is arguably in the algorithmic suggestion systems that are the backbone of social media networks, streaming services, online shopping, and other applications.

A seemingly innumerable amount of websites, from Amazon and Facebook to Twitter and Spotify, all use this technology. In many ways, they’re making our lives easier — product and music recommendations save us time, search engine suggestions are tailored to our interests, and our devices learn more about us the more we use them.

And this ease is a seismic gamechanger for companies looking to get inside the minds of their customers.

There is maybe no better example of this than Amazon. Now the most valuable company globally, it could have never been so without the revolutionary shift to a more sophisticated machine learning system it underwent in the mid-2010s.

Now, Pedro Domingos, a professor of computer science at the University of Washington told WIRED, the company has become a leader.

“If you asked me seven or eight years ago how big a force Amazon was in AI, I would have said, ‘They aren’t,’” he said. “But they have really come on aggressively. Now they are becoming a force.”

Amazon’s immense number of computers and other systems that power its titular website and the company’s growing number of other services could not function without AI and AI chipsets. Amazon’s shopping service has revolutionized the retail industry, and it isn’t going away. Neither are the chipsets that power it.

About the Author


Headshot for author Elijah Labby

Elijah Labby is a graduate of the National Journalism Center. He has previously written for Broadband Breakfast, a technology and internet policy website.

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