Chinese domestic chipmakers such as Huawei and Cambricon, along with Big Tech firms developing their own semiconductors, are expected to capture nearly 80% of China's artificial intelligence (AI) server market this year. The position of global competitors such as Nvidia appears set to narrow further.
According to the South China Morning Post (SCMP) on Monday, Taiwanese market research firm TrendForce said the standing of foreign players such as Nvidia and AMD continues to wobble amid geopolitical tensions. Their combined share of China's AI server market is forecast to drop to 21% this year from 34% last year.
By contrast, the share held by Chinese domestic firms such as Huawei and Cambricon is expected to rise to 56% this year from 46% last year. The share of highly specialized application-specific integrated circuits (ASICs) designed by Chinese internet companies is also expected to expand to 23% from 20% over the same period.
"The segment will continue to expand as geopolitical uncertainty and Beijing's drive toward technological self-reliance accelerate adoption," Frank Kung, a research manager at TrendForce, said at a conference held in Shenzhen on Nov. 23.
On the demand side, China's largest internet companies are driving AI chip growth. They are rapidly increasing their adoption of homegrown processors from the likes of Huawei and Cambricon.
Kung said ByteDance and Alibaba Group are the most aggressive companies in building AI infrastructure. "These Chinese Big Tech firms are not only the largest buyers of servers and AI infrastructure, but will also become the most promising players in developing their own chips going forward," he said.
Alibaba and Baidu are accelerating the development of proprietary ASICs through their semiconductor subsidiaries T-Head and Kunlunxin, respectively. This aligns with a global trend in which Google and Amazon are making massive investments in custom AI chips.
Meanwhile, Nvidia's dominance in the global market appeared largely solid. TrendForce projected that global AI server shipments will grow more than 28% this year, supported by aggressive capital expenditure by the world's largest technology companies. Nvidia is expected to maintain a commanding 64% share next year, followed by AMD at 8.6%.
