Demand for artificial intelligence-enabled smartphones could help to protect parts of the semiconductor industry from a “vicious” downturn if investment in data centres slows, said the chief executive of the world’s largest provider of chip testing machines. Doug Lefever, who leads Nvidia supplier Advantest, said he was watching for any sign of slower spending on AI by big US tech groups.
Meta, Google and Microsoft have been heavy investors in data centres that can deliver massive amounts of computing power. A fall-off “may not last long and then it may go right back up, but because of the concentration right now in the market, any slowdown in the data centre buildout is going to have big reverberations in the supply chain”, said Lefever. “I don’t like to use the word bubble because it implies that it’s going to go away, but there will be cycles,” he said. “When that next cycle comes . . . it could be pretty vicious.” In contrast, demand for AI smartphones was “kind of slow” but could take off rapidly, Lefever said. “Everyone is holding their breath, waiting for the killer app with the AI handsets . . . if that happens and people start replacing their phones, it’s going to be crazy,” he said. Tokyo-based Advantest, a key supplier of testing equipment for Nvidia’s high-end graphics processing units, is one of the companies to benefit most from the rapid rise in demand for semiconductors. The company controls more than half of the semiconductor testing market, and demand for its services has skyrocketed as chips have become more advanced and expensive. That dominance has lifted its share price by more than 80 per cent over the past year and about 500 per cent over a five-year period, with a recent dip in December attributed to fears that incoming president Donald Trump would get tougher on Chin