The AI frenzy hides a sluggish semiconductor recovery

Usually, when TSMC predicts that it will grow 21-26 percent in the current year, and Samsung’s operating result is skyrocketing, the entire semiconductor industry can look forward to a solid year. But as the recovery is proving uneven and more sluggish than anticipated, the industry doesn’t even seem sure to crack double-digit growth in 2024.

The contrast between the Taiwanese industry bellwether and the industry as a whole is, in large part, due to one application: AI. Cloud service providers and forward-looking companies embracing generative AI are generating “extremely high” demand for high-end silicon, TSMC CEO CC Wei told investors during the Q1 earnings call. The GPUs used for AI training also require copious amounts of memory, helping memory manufacturers to climb out of a long downcycle (though Samsung is trailing SK Hynix in this field).