AI boom draws chip supply from other end-markets, Siltronic CEO says

Read a summary of this article on FAST.
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST Tap here to return to FAST
FAST

Nov 4 : An AI chip boom is redirecting semiconductor supply toward data centres and away from smartphones and PCs, constraining some end markets, Siltronic CEO Michael Heckmeier said on Wednesday.

Siltronic, which makes silicon wafers used in semiconductors, raised its annual sales forecast for the second time this year on Wednesday, citing stronger demand for its wafers.

AI-linked demand has become the chip industry's main growth engine, but Heckmeier told Reuters in an interview that some other semiconductor end markets could grow faster if more chips were available.

"It's not that AI is offsetting certain weaknesses," Heckmeier said. "It's more AI is generating a certain weakness."

CNA Games

Guess Word
Crack the word, one row at a time

Buzzword
Create words using the given letters

Mini Sudoku
Tiny puzzle, mighty brain teaser

Mini Crossword
Small grid, big challenge

Word Search
Spot as many words as you can
Show More
Show Less

Demand for AI-related chips remains so strong that semiconductor manufacturers are allocating more supply to those applications, leaving less capacity for other end markets.

"When our customers have the choice to sell their chips to different segments, they will always send them to the ones that pay best," he said. "The pockets of the AI players, particularly the hyperscalers, are the deepest."

The trend has made AI servers the industry's main growth engine, with the impact extending beyond higher server volumes.

Heckmeier said AI server farms consume roughly three to four times more silicon area than traditional servers, boosting demand for advanced wafers

Any moderation in AI demand would not necessarily derail the industry's growth, Heckmeier said, because capacity could flow back to smartphones, PCs and other markets where underlying demand remains solid.

"We don't see it at all today," Heckmeier said of any slowdown in AI demand.

"But even if it came, we feel there is a natural balance in the system that the overall growth dynamics could go on."

Newsletter

Week in Review

Subscribe to our Chief Editor’s Week in Review

Our chief editor shares analysis and picks of the week's biggest news every Saturday.

Sign up for our newsletters

Get our pick of top stories and thought-provoking articles in your inbox

Subscribe here

Get the CNA app

Stay updated with notifications for breaking news and our best stories

Download here

Get WhatsApp alerts

Join our channel for the top reads for the day on your preferred chat app

Join here