In the era of artificial intelligence (AI), application-specific integrated circuits (ASICs) are rising, with U.S. Broadcom leading the market. Traditional Japanese ASIC corporations and emerging players are expanding their businesses. Major investments in ASICs are also being made by China’s leading big tech corporations.
The semiconductor industry anticipates that from next year, the ASIC market will become a battleground rivaling graphics processing units (GPUs). ASICs are custom-designed chips specialized for specific functions such as learning and inference, offering lower costs, power consumption, and total investment compared to GPUs, and are gaining attention as substitutes for GPUs in generative AI data centers. Additionally, ASICs are considered essential in markets for specific-purpose chips, unlike traditional servers and PCs, such as in the automotive and Internet of Things (IoT) sectors.
According to major foreign media and industry sources on the 17th, big tech corporations like Google, Meta, and ByteDance are investing in the development of ASICs for customized semiconductors needed for data center operations and are expected to partner with U.S. Broadcom to deploy over 1 million AI chips in data centers by 2027. Revenue in this market is projected to reach up to $90 billion (129 trillion won), significantly surpassing previous forecasts by market research firms.
ASIC refers to custom-configured semiconductors made for specific purposes, unlike general integrated circuits. In the past, AI-specific ASICs took a long time to develop and required significant investment, resulting in development being led by a small number of IT multinational corporations. The most representative ASIC was the tensor processing unit (TPU), the core hardware of Google's DeepMind AlphaGo. Since then, ASICs have evolved to possess excellent performance and power efficiency, enabling rapid development through investments in research and development by major fabless semiconductor design corporations.
So far, Broadcom has established the most prominent position in the industry. In a recent earnings report, Broadcom disclosed that AI-related revenue surged by 220% due to the skyrocketing demand for generative AI infrastructure over the past year. Broadcom also noted that it is developing customized AI chips with three large cloud corporations, stating it sees opportunities in AI over the next three years. The three corporations are Google, Meta, and ByteDance, which operates TikTok.
Reports indicate that Broadcom's market capitalization surged to $10.64 trillion on the 14th (local time) after it partnered with the world's largest data center investment corporations, surpassing the $10 trillion mark. It rose to the eighth position in market capitalization rankings, surpassing Taiwan Semiconductor Manufacturing Company (TSMC) at $10.42 trillion and Berkshire Hathaway, led by investment mogul Warren Buffett, at $992.58 billion.
Japanese corporations are also stepping up their offensive. Nisshinbo Micro Devices, launched through a merger between Shin Nihon Radio Co. and Ricoh Electronic Devices in 2022, is gradually expanding its presence in the automotive ASIC market. In less than two years since its official launch, it has secured seven major European automotive corporations as clients, successfully certified its ASIC chip product line, and is currently expanding its market share in the U.S. Meanwhile, MegaChips, a system semiconductor corporation established in 1990, is also displaying aggressive movements. In April, it acquired U.S. SiTime for $200 million and is strengthening its position in the ASIC market specializing in wearables and IoT.
China is also making investments in ASICs, focusing on major big tech corporations like Baidu and ByteDance. Companies specialized in ASICs, such as MicroBT, are currently acquiring high-priced ASIC IP (design assets) in the U.S., South Korea, and other regions. A source in the domestic semiconductor industry noted, "Considering that the ASIC IP industry is ahead of existing semiconductor industry trends by 2-3 years, it indicates that China is also aiming to enter the ASIC sector within a few years," adding, "With its vast domestic market, China presents a favorable environment for the growth of specialized ASIC corporations."
Meanwhile, JPMorgan forecasted in a prior report that the current size of the design market, excluding manufacturing, reaches $20 billion to $30 billion, with the ASIC market expected to grow over 20% annually in the long term. It particularly observed that Broadcom is expected to dominate the market with a share of 55-60%. Global consulting firm McKinsey also anticipates that the majority of AI workloads will be processed by ASICs by 2030.