The Rise of Semiconductors Through AI
By Fritzgerald Aristor ’27, Associate
As you read this article, you are contributing to the development of a certain and powerful market. That’s right! You and I alike have utilized and contributed to the semiconductor industry, whether by use of our smartphones or other devices. Now, why does this matter? It’s simple because even after a drop in the market in 2023 due to the occurrence of COVID-19 causing supply chain disruptions, the semiconductor market has seen a huge return in revenue generated in 2024 and looks to have an undeniable and promising future.
So, what has caused the return in revenue for the semiconductor market today? Well, one significant factor is something you hear about every day: Artificial Intelligence (AI). Through AI, huge company names such as Nvidia and Advanced Micro Devices have nearly doubled in value. According to Forbes, Nvidia had begun the year with $1.2T market value, less than half the size of Apple’s and Microsoft’s market cap, but now Nvidia’s stock performance has sent its market cap to $3.33T, which is greater than that of Apple and Microsoft. This growth in market cap is a 177% spike, with Nvidia estimated to control between 70% to 95% of the AI chip market. AI has allowed these companies to be able to design semiconductor chips, simulate and test performance, and optimize manufacturing to detect defects and reduce costs. These improvements from AI have caused a reduction in time-to-market and have led to innovation whether regarding materials used or the processes utilized.
Another contributing factor is the growing demand for electronic equipment across various industries such as automobiles, healthcare, automation, aerospace, telecommunications, and energy which all rely on semiconductors. As mentioned earlier, the US is a heavy contributor to the semiconductor industry, especially considering the rapid growth of population and urban city development which has led to an even greater demand for advanced consumer goods. This is evident because 83% of the US population lives in urban areas and that is expected to rise to 89% in the US and 68% globally by 2050. Semiconductors are essential to the society we know today, whether it concerns smartphones, TVs, refrigerators, digital cameras, pacemakers, credit cards, etc. Numerous consumer goods manufacturers such as Apple, Samsung, and Panasonic have made large investments in the semiconductor industry. Apple, for example, bought $67B worth of semiconductors in 2022 to sustain the development of their wearable products such as the Apple Watch and AirPods, as well as demand for Mac computers and iPads. Another large investment, for example, is Samsung Electronics planning to invest $230B in part of the South Korea National Project over the next twenty years to build the world’s largest semiconductor manufacturing base near Seoul. The purpose of doing so is to build five new memory and foundry fabs, facilities in which semiconductor products are manufactured, which will largely use AI to facilitate fabrication.
According to Fortune Business Insights, the global semiconductor industry is projected to grow from $681.05B in 2024 to $2062.59B by 2032 at a CAGR of 14.9%. The demand for faster and more advanced memory chips will drive market growth for a long time to come. AI is expected to grow to almost $1.8T with an estimated CAGR of 37.3%, supporting the semiconductor market in the years ahead. Be ready to enter a new age of modern electronics, with an increased reliance on semiconductors due to the AI boom.
Fritzgerald Aristor is a sophomore from Bedford, New Hampshire pursuing a degree in Electrical Engineering. Fritz is very interested in entrepreneurship and sustainability and joined the fund to learn more about angel investing and startup practices. Fritz acts as the CTO and COO for DormDrop, an early-stage startup that is designed to promote and view clubs, events, and other local activities while simultaneously optimizing the college experience for students across the country. Outside of academics and professional work, Fritz is actively involved on campus as a Hamel Scholar, Shaw Scholar, Community Service Chairman & Scholarship Chairman of the Pi Kappa Alpha Fraternity, Communications Director of the Entrepreneurship Club, member of the Alpha Kappa Psi Fraternity and an active member of various other clubs and he looks forward to exploring additional opportunities and to giving back to the community.
