In the era of artificial intelligence (AI), application-specific integrated circuits (ASICs) are rising, with Broadcom of the United States leading the market. Traditional Japanese ASIC corporations and emerging strong players are expanding their businesses. China is also conducting ASIC-related investments centered around major big tech corporations.
The semiconductor industry anticipates that the ASIC market will become a battleground rivaling that of graphics processing units (GPUs) starting next year. ASICs are chips meticulously designed and produced to specialize in 'specific functions' such as learning and inference, and they are attracting attention as substitutes for GPUs in generative AI data centers due to lower prices, power consumption, and total investment costs. Additionally, ASICs are considered essential in the special-purpose chip market, distinct from conventional servers and PCs, such as in automotive and Internet of Things (IoT) applications.
According to major foreign media and industry sources on the 17th, big tech corporations such as Google, Meta, and ByteDance are investing in the development of ASICs as customized semiconductors necessary for operating data centers, and they are projected to deploy over 1 million AI chips in their data centers by 2027 in partnership with Broadcom. Forecasts suggest that revenue in this market could reach up to $90 billion (129 trillion won), which significantly exceeds projections from existing market research firms.
ASIC refers to customized application-specific integrated circuits designed for particular purposes, in contrast to general integrated circuits. Historically, AI-specific ASICs took a long time to develop due to high investment costs, leading to development being pursued mainly by a handful of IT conglomerates. The most representative ASIC is the tensor processing unit (TPU), which was the core hardware of Google's DeepMind AlphaGo. Subsequently, ASICs have achieved excellent performance, power efficiency, and a structure enabling rapid development, thanks to research and development investments from large fabless corporations.
So far, Broadcom has established a dominant position in the industry. In a recent earnings report, Broadcom indicated that its AI-related revenue increased by 220% due to a surge in demand for generative AI infrastructure over the past year. Broadcom also noted that it is currently developing customized AI chips with three major cloud corporations and is optimistic about opportunities in AI over the next three years.
With reports that Broadcom has partnered with the world's largest data center investment corporations, Broadcom's market capitalization surged to $10.64 trillion on the 14th (local time), exceeding the 'trillion dollars' mark. In market capitalization rankings, it jumped to 8th place, 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 intensifying their offensive. Nisshinbo Micro Devices, launched through the merger of Shin-Nihon Radio Co., Ltd. and Ricoh Electronic Devices in 2022, is increasingly establishing its presence in the automotive ASIC market. In under two years since its official launch, it has secured seven major European automotive corporations as clients, already obtaining certification for its ASIC chip product line and is currently expanding its market share in the United States. Megachips, a system semiconductor corporation founded in 1990, is also demonstrating aggressive moves. In April, it acquired SiTime for $200 million and is strengthening its position in the ASIC market specialized in wearables and IoT.
China is also making ASIC investments centered around major big tech companies such as Baidu and ByteDance. ASIC specialist MicroBT is currently purchasing expensive ASIC IP (design assets) from regions including the United States and South Korea. An official from the domestic semiconductor industry noted that, considering the characteristics of the IP industry, which is 2-3 years ahead of existing semiconductor industry trends, China is also aiming to enter the ASIC field within the next few years, explaining that the vast domestic market provides a favorable environment for specialized ASIC corporations.
Meanwhile, JPMorgan, in a previous report, noted that the design market size, excluding manufacturing, currently reaches between $20 billion and $30 billion, and forecasts that the ASIC market will grow by more than 20% annually in the long term. It specifically expects Broadcom to reign as a dominant corporation with a market share of 55-60%. Global consulting firm McKinsey also predicts that by 2030, most AI workloads will be processed using ASICs.