Anticipated Insufficient Supply of Nvidia AI Chips in 2024

US semiconductor giant Nvidia is expected to face a shortage in the supply of artificial intelligence (AI) chips this year, limiting availability to only a select few leading companies.

In August of last year, Foxconn successfully secured orders for substrates from Nvidia, specifically for its HGX AI server chips. These orders, combined with the earlier orders for substrates for the DGX AI server chips, positioned Foxconn as Nvidia's primary supplier of substrates for AI server chips, accounting for over 50 percent of the total supply.

While Foxconn's AI server business has been performing well, the industry as a whole is encountering a significant shortage of AI chips. Although the shortage is expected to alleviate in the latter part of the year, the supply of AI chips is unlikely to meet the high demand. Resolving this shortage will necessitate the establishment of new manufacturing facilities in the upstream sector of the supply chain to augment production capacity.

This year's demand for consumer electronics will be heavily influenced by geopolitical factors and the global economic environment. Foxconn, in particular, is projected to experience a marginal improvement in overall business performance compared to the previous year.

In the third quarter of last year, Foxconn reported revenues of TWD1.54 trillion (USD47.7 billion), representing a 12 percent decrease from the same period the previous year, falling short of market expectations. However, the net profit for the period increased by 11 percent to TWD43.1 billion (USD1.4 billion), surpassing market expectations.