AI Chip Market Set for Explosive Growth in 2024, Gartner Predicts

The global market for artificial intelligence (AI) chips is poised for a significant surge in 2024, according to a recent forecast by Gartner, a leading research and consulting firm. The report predicts a robust 33% increase in revenue compared to 2023, reaching a staggering $71 billion. This growth is attributed to several key factors driving the demand for high-performance AI processing power.

One of the primary forces behind this surge is the rise of generative AI (GenAI). This advanced form of AI is capable of creating entirely new content, such as images, text, and even code. GenAI applications require immense computational resources, fueling the need for specialized AI chips that can handle these complex tasks efficiently. Data centers, the nerve centers of the digital world, are witnessing a significant increase in GenAI workloads, leading to a corresponding rise in demand for AI accelerators. These specialized chips are designed to offload the heavy processing burden from traditional central processing units (CPUs), significantly improving performance and efficiency.

Gartner's forecast highlights the dominance of compute electronics within the AI chip market. This segment, encompassing data center equipment and other computing devices, is projected to account for nearly half (47%) of the total revenue in 2024, translating to a staggering $33. 4 billion. The ever-growing need for AI-powered data analysis and processing in various sectors, such as finance, healthcare, and manufacturing, is propelling this segment's growth.

The report also explores the increasing integration of AI capabilities into personal computers. Gartner predicts that 22% of all PC shipments in 2024 will incorporate AI elements. This trend is expected to accelerate rapidly, with Gartner forecasting that by 2026, virtually all enterprise PC purchases will involve AI-enabled machines. These AI PCs, as defined by Gartner, typically include a dedicated neural processing unit (NPU). NPUs are specifically designed to excel at tasks involving deep learning algorithms, a core component of many AI applications. The inclusion of NPUs allows AI PCs to run cooler, quieter, and with lower power consumption, enabling seamless background execution of AI tasks that enhance user experience and productivity.

Looking beyond compute electronics, the report acknowledges the growing adoption of AI chips in other sectors. The automotive industry, for instance, is witnessing a significant rise in AI-powered features like advanced driver-assistance systems (ADAS) and autonomous driving functionalities. Gartner forecasts that AI chip revenue in the automotive electronics segment will reach $7. 1 billion in 2024. Similarly, the consumer electronics market is also expected to experience growth in AI chip adoption, with a projected revenue of $1. 8 billion in 2024. This trend is likely fueled by the increasing integration of AI capabilities into smart devices, wearables, and other consumer electronics products.

The projected surge in AI chip revenue signifies the growing importance of AI across various industries. As AI applications become more sophisticated and ubiquitous, the demand for efficient and powerful AI processing solutions is expected to continue its upward trajectory. This creates significant opportunities for chip manufacturers and technology companies that can provide innovative solutions to address the evolving needs of the AI landscape.

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