Tech Giants Pivot to In-House Chip Production Boosting Semiconductor Growth

2025-08-03 business

London, Sunday, 3 August 2025.
Hyperscalers like Meta enhance their AI capabilities by developing custom chips, leading to increased semiconductor demand and strategic industry mergers.

Hyperscalers Dive into Custom Chip Production

The semiconductor industry has seen an intensified focus on custom chip production from hyperscalers such as Meta and Amazon. Meta’s recent unveiling of its AI inference chip, named ‘Artemis,’ is a testament to this shift. The chip is designed to optimize performance specifically for Meta’s large language models (LLMs) and decrease the social media giant’s reliance on chips from external providers like NVIDIA [1]. Simultaneously, Amazon’s rollout of Trainium2 and Inferentia3 demonstrates its commitment to managing AI workloads at an unprecedented scale within its AWS infrastructure [1].

Impact of High-Bandwidth Memory Demand

Driven by AI and data-centric applications, the demand for high-bandwidth memory (HBM) is surging. Micron’s initiation of volume production for HBM3E signifies an effort to cater to the increased need, notably from AI startups and hyperscalers. These memory advancements are crucial to maintaining competitive AI processing speeds and data throughput [1]. The market projects HBM revenue to hit $21 billion in 2025, aligning with ON Semiconductor’s focus on vertically integrated manufacturing strategies to meet this demand [9].

Strategic Mergers and Acquisitions on the Horizon

The semiconductor market is bracing for a wave of mergers and acquisitions (M&A) as companies seek to consolidate resources and enhance their capabilities in response to growing competition and technological demands. Industry analysts predict a rise in consolidation, particularly in the fabless design and intellectual property sectors, to better align with the needs of AI-enhanced production [1]. Meanwhile, U.S. trade policies and export controls, especially regarding China, continue to influence strategic decisions around these consolidations [3].

European Electronics Sector Adjusts to Industry Trends

In Europe, the electronics sector is adjusting to the new dynamics introduced by hyperscalers and AI-driven semiconductor requirements. Dutch company ASML, facing export restrictions to China, exemplifies the regional impact of shifting global trade practices [1]. As companies like ON Semiconductor invest significantly in power semiconductor technologies like silicon carbide (SiC) and gallium nitride (GaN), Europe is positioned to play a crucial role in power-efficient semiconductor advancements, particularly for AI data centers and electric vehicles [8].

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semiconductor growth hyperscalers AI