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Nvidia supplier claims that slower AI spending could reignite the ‘vicious’ downturn among chipmakers.

Chipmakers could face a ‘vicious’ downturn, according to Advantest CEO, with reduced spending from data centres. Barring that, he

Nvidia supplier claims that slower AI spending could reignite the ‘vicious’ downturn among chipmakers.


Chipmakers could face a ‘vicious’ downturn, according to Advantest CEO, with reduced spending from data centres. Barring that, he sees AI phones potentially justifying the AI investments propping up chipmakers. Growing worries about the present rate of AI expenditure are the backdrop for Doug Lefever’s remarks to the Financial Times.

The Chairman of the largest chip-testing equipment provider said to the Financial Times that semiconductor companies would be in bad shape if Big Tech slowed down in spending on data centres. According to him, AI-related cell phones might save the day.

Doug Lefever, CEO of Advantest, stated the downturn does not have to be long for the industry to feel an impact. Being so concentrated on hyperscalers in the space, he said, “Any slowdowns in the build-out of data centres would reverberate greatly in the supply chain.”

Firms like major competitors like Microsoft, Amazon, and Meta Platforms have sunk hundreds of billions of dollars into AI infrastructure, eliciting equal parts excitement and dread on Wall Street. Hyperscalers are expected to have invested $222 billion in data centres and AI processors by the end of the year in order to operate the new technology.

Nonetheless, as AI investments are projected to climb higher and higher, some observers have started worrying about whether such a trend can really be sustained- more so when it’s not fully met with the hype promised by AI itself.

This says a lot about the over-investment in AI by companies even the CEO of Salesforce Marc Benioff carried such a statement in his earlier speech describing it as a “race to the bottom. He observed, “Although there is a huge run of many organizations toward these forms of public clouds, I think we have to be careful exactly how much investing we’re doing in it.”

Lefever has an excellent reason to pay attention to the field. The hype surrounding AI is making semiconductor products even more complicated, thus increasing demand for Advantest’s equipment and boosting the Tokyo-based ADR’s returns this year by 71.32%.

Lefever said to FT, “I don’t like to use the word bubble because of its connotation with its going away, but there will be cycles, and when that next cycle comes… it could be pretty vicious.”

“But AI smartphones might be the industry’s saviour,” Lefever remarked.

“Everyone’s just holding their breath, waiting for that killer app with the AI handsets…. and if it arrives and consumers start switching out their phones, it’s going to be crazy,” he told FT.

Wall Street analysts are very optimistic about AI phones, which are silently being factored into price targets. Wedbush Securities increased its target price for Apple to $325 on Thursday, citing strong hopes for Apple Intelligence, an AI program that would be available on upcoming iPhone models.

“This is going to be a long journey of multiple years in artificial intelligence that will create Apple’s future with the next chip architecture, the next hardware releases, and the next iPhone models encompassing the AI foundation that most consumers will eventually embrace,” analyst Dan Ives said.

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