Why Not All Semiconductor Companies Are Benefiting from the AI ​​Boom Like Nvidia – NBC4 Washington

• Not all chipmakers are benefiting from the AI ​​boom, financial reports show, underscoring the complexity of the semiconductor supply chain.
• Companies like Nvidia and AMD are benefiting from AI model training companies, and chipmakers like TSMC have also seen support.
• However, Arm and Qualcomm, which are still not very involved in AI, have not seen as much revenue growth as other companies.

Not all chip companies are benefiting from the AI ​​boom, financial reports show, underscoring the complexity of the semiconductor supply chain and the dominance of some companies over others in different parts of the sector.

Many semiconductor companies have reported second-quarter earnings results, some disappointing and others disappointing. That gives you a sense of how AI enthusiasm is affecting their profits.

The current interest in AI revolves around two key terms—large language models (LLMs) and generative AI. LLMs require massive amounts of computational resources and data to train and are the basis for generative AI applications such as chatbots from Google and OpenAI.

The tech giants that train LLMs aren’t cutting back on spending. Meta said Wednesday that it expects a “significant” increase in capital spending in 2025 “to support our AI research and product development efforts.” Microsoft said this week that its capital spending jumped nearly 80% year over year to $19 billion in the June quarter.

The tech giants’ spending on ever-expanding computing resources has been a huge boost for Nvidia, as it is the company’s graphics processing units (GPUs) that are used to train LLMs.

But Nvidia rival AMD has launched its own chip, called the MI300X AI chip, for AI purposes and is starting to see the benefits. AMD said Tuesday that it expects data center graphics processor revenue to exceed $4.5 billion in 2024, up from $4 billion the company forecast in April. The chipmaker reported second-quarter earnings and revenue that beat market expectations.

Chip and tool companies also appear to be benefiting from the AI ​​boom. TSMC, the world’s largest semiconductor maker, said last month that its second-quarter net profit rose more than 36% year over year, and its financial results beat market expectations.

Meanwhile, ASML, which makes the specialized tools required to produce the world’s most advanced chips, said last month that second-quarter net bookings rose 24% year over year, underscoring demand from companies like TSMC that make semiconductors. Samsung said second-quarter operating profit rose 1,458.2% year over year.

However, not all semiconductor companies have benefited from the increase in investment in AI, as this technology is much less sensitive to them at the current stage of development.

Share prices of Qualcomm and Arm fell on Wednesday after releasing weak forecasts for the current quarter.

Although both companies emphasize their importance for AI applications, the truth is that their exposure to this technology is still very limited.

Arm designs the blueprints that many companies base their chips on, and Arm semiconductors are in most of the world’s smartphones. While many electronics manufacturers are talking about AI phones, it hasn’t led to fundamentally higher growth for the chip designer.

The British company still derives a significant portion of its revenue from consumer electronics, rather than the data centers where AMD and Nvidia have found success. Analysts have previously told CNBC that Arm could benefit from AI as more devices start to incorporate the technology.

Qualcomm chips are used in smartphones such as those made by Samsung, and the company still makes a lot of revenue from mobile phones. As with Arm, Qualcomm silicon is not used in the type of data centers where LLM training takes place.

The company’s chips will find their way into Microsoft’s upcoming AI PCs, but again, this is a long-term investment for Qualcomm.