The rapid rise of Artificial Intelligence (AI) and Generative AI is disrupting many economic sectors. It's also driving up demand for more advanced computing power, creating challenges and opportunities for the world's computer equipment manufacturers.
HSBC expects two key catalysts to drive increased investment in AI-related hardware. First, major cloud and technology companies are racing to develop their own large language models. And second, early movers in AI, like OpenAI with its ChatGPT service, are rushing to improve their systems and support a growing user base.
In our latest report, we examine eight key hardware sub-sectors that are set to benefit.
These include data processing units, a key component in systems handling large amounts of information. The global market in this sub-sector is set to increase from USD7.5bn in 2022 to USD24.5bn in 2025, according to CCID.
Another sub-sector is server manufacturing – a complex industry that requires collaboration across the supply chain. Our analysis finds that AI servers are 17 to 39 times more expensive than general purpose servers.
Computer cooling systems are also changing. Air cooling is the traditional way to keep temperatures down, but various forms of liquid cooling are emerging that are cheaper and more effective.
Other sectors we look at include:
- network switches and optical transceivers
- interconnects and interfaces
- advanced packaging
- printed circuit boards
Our full report also assesses the current state of China's AI sector. Given that there are US restrictions on China procuring certain components from overseas suppliers, we see strong hardware localisation opportunities across a range of sectors. And on the software front, China now has 80 large language models under development, which may serve to narrow the gap with the global leaders in this area.
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