KISDI News(detail) − KISDI KOREA INFORMATION SOCIETY DEVELOPMENT INSTITUTE

"AI semiconductors provide new windows of opportunity in terms of demand, technology, and regulations for market participants."
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Future AI semiconductor policies should be designed to enhance the effectiveness of existing policies and to serve as windows of opportunity, reflecting the evolving dynamics of the value chain and market changes.

Policy implications for enhancing the effects of existing AI semiconductor policies:
▲ Support for companies participating in various sectors of the horizontal AI semiconductor value chain that are at a competitive disadvantage.
▲ Detailed support for diverse demand sectors and the small-batch, multi-type production approach of AI semiconductors.
▲ Support for various technological layers supporting AI semiconductors, adapting to changes in these technological layers.
▲ Support for participation in the AI semiconductor platform ecosystem and for the development and strengthening of platforms by domestic leading companies.

The Korea Information Society Development Institute (KISDI, Acting President Kim Jung-un) has published KISDI Perspectives (24-07-01) “New Opportunities in the AI Semiconductor Market: Current Status and Prospects.”

This report analyzes the new opportunities presented by the rise of AI semiconductors, examining the definition and importance of AI semiconductors, the AI semiconductor market and its prospects, and related semiconductor markets. It also analyzes changes in the value chain in major areas due to the rise of AI semiconductors, market change drivers for AI semiconductors, and recent AI semiconductor policies in our country to discuss policy implications that can utilize these windows of opportunity.

The main contents are as follows:

Firstly, the importance of AI semiconductors as core infrastructure supporting the continuous development of AI technology is increasing, and the emergence of AI semiconductors provides a window of opportunity for new entrants to catch up with and possibly replace existing companies in the semiconductor market. Specifically, the global AI semiconductor market is expected to grow in double digits, with its share in the total semiconductor market and system semiconductor market expected to increase dramatically from 10.1% and 16.1% in 2023 to 20.4% and 35.0% in 2028, respectively. In terms of specific markets, while existing GPU suppliers such as Nvidia, Intel, and AMD continue to dominate, various big tech companies and startups, including Amazon, Samsung, Apple, and Tesla, are also entering the market for other types (AP, Microprocessor, FPGA, ASIC).

Secondly, the rise of AI semiconductors in the semiconductor market is transforming existing value chains, leading to changes in the competitive structure and value creation methods of the semiconductor industry, thereby bringing innovation to the ecosystem.

Thirdly, the drivers of changes in the AI semiconductor market include: ① Diversification of AI semiconductors due to the activation of on-device AI (demand), ② Entry of big tech companies into the AI semiconductor market (market participants), ③ Strategic development of system software essential for optimizing AI semiconductor performance (element technology), ④ Platformization by key leading companies (ecosystem).

Lastly, the implementation of institutional and public policies has created a window of opportunity for entering the AI semiconductor market. The recent comprehensive 'AI-Semiconductor Initiative Strategy' combines policies from three perspectives: demand-specific support, a horizontal ecosystem approach, and support targeted at different technology layers. These policies are designed to be mutually exclusive while together forming a cohesive structure.

This report includes analyses on ▲ the current AI semiconductor market size and forecast, ▲ changes in the key semiconductor value chain due to the rise of AI semiconductors, ▲ drivers of changes in the AI semiconductor market, and ▲ recent AI semiconductor policy analysis. Based on these, it proposes the following policy implications to enhance the effects of existing AI semiconductor policies and to actively utilize institutional windows of opportunity:

Firstly, support is needed for companies participating in various sectors of the horizontal AI semiconductor value chain that lack competitiveness due to changes brought about by AI.

Secondly, as the demand for AI semiconductors diversifies and shifts toward small-batch, multi-type production, more detailed policies tailored to specific demand sectors are required.

Thirdly, as the demand for AI semiconductors diversifies and supports changes across various technological layers, there is a need for support policies tailored to each technological layer to capitalize on the emerging opportunities.

Lastly, as platform strategies for AI semiconductor design and production are being strengthened, there is a need to support participation in major platform ecosystems and to provide incentives for domestic leading companies to develop and enhance their platforms.

KISDI Perspectives is available for download on the KISDI website (www.kisdi.re.kr).

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KISDI News

KISDI Perspectives (24-07-01) “New Opportunities in the AI Semiconductor Market: Current Status and Prospects” Published