Generative AI Gives Global Semiconductor Revenue A Lift After More Than a Year of Declines [Chart]

Generative AI has helped worldwide semiconductor revenue rise again after five consecutive quarters of declines, according to market research firm Omdia’s latest report. The 3.8% uptick in the second quarter of 2023 translates to $124.3 billion total, though that is still 21% below revenue last year. The positive news is largely due to Nvidia, who led the turnaround with a 47.5% revenue surge based on exploding demand for its generative AI chips.

Semiconductor Semi-Recovery

Omdia’s analysis found revenue increasing across most top chip firms, signifying a broad reversal versus a single-sector rebound. The rapid adoption of generative AI models like ChatGPT fueled Nvidia’s massive growth, propelling it to third in market share from ninth last year. Nvidia’s $2.5 billion quarterly boost accounted for over half the industry’s $4.6 billion overall increase.

The data processing segment, including generative AI chips, expanded 15% and now represents 31% of total semiconductor revenue. Wireless, dominated by smartphones, comprises the second largest segment but declined by 3% as consumer demand lags. Automotive, a relatively bright spot recently, maintained growth at 3.2%. Analysts view automotive electronics as a promising semiconductor application as electric vehicles become more popular.

The revenue upswing ends the longest downturn since tracking began in 2002. That said, it is still not a full recovery, and any timeline for one is uncertain. Still, the decisive reversal offers evidence the cyclical correction has run its course. With generative AI fueling their largest growth engine in data center chips, Nvidia’s resurgence points to a sector primed for durable expansion. But markets like mobile and IoT must also rebound to spur a broad upcycle.

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