Latest market news

AI boom to drive demand for chip materials

  • Market: Metals
  • 30/06/23

The growing hype around artificial intelligence (AI) has highlighted the pivotal role of specialised silicon-based semiconductors in driving the deployment of new technologies at scale, and signals rising demand for metals used to make the chips themselves and the associated data centre servers.

AI — the ability of machines to perform tasks associated with human brains — requires specialised semiconductor chips that are optimised for advanced computation, more powerful and more efficient than the chips used in consumer electronics. Demand from the sector will have a lasting impact on chip design and production, owing to the massive volumes of data that AI applications process and store. Although some general-purpose semiconductors can be used for some basic AI functionality, they are becoming less useful as AI applications advance. And as demand for AI chips surges, so too does the need for silicon wafers.

The amount of silicon used in a single AI chip varies depending on its design and functionality. Silicon wafers with diameters of around 5-8 inches, and increasingly, up to 12 inches, are doped with chemicals such as boron, phosphorus, arsenic, and gallium to prepare the silicon for imprinting circuitry patterns. A metal layer is then laid over the imprinted wafer, and electrical circuits are etched on the wafer. The back-end of the chip sits on top of this front-end and consists of layers formed of insulators through which conductive metal wires called interconnects connect the electrical devices of the front-end. Interconnects were typically made from aluminium in the past but are now more commonly copper or cobalt based.

AI chips are forecast to account for up to 20pc of the $450bn total semiconductor market by 2025, according to consulting firm McKinsey. US-based Insight Partners projects that sales of AI chips will climb to $83.3bn in 2027 from $5.7bn in 2018, a compound annual growth rate (CAGR) of 35pc. That is close to 10 times the forecast growth rate for non-AI chips.

Data centre servers are central to AI computation, particularly as algorithms are typically trained in the cloud. The rising adoption of cloud computing and the emergence of 5G telecom technology, which provides fast data transmission with low latency, are driving demand for servers that rely on AI chips for efficient processing in healthcare, automotive and financial services applications .

US-based chipmaker Nvidia made waves in May when it announced that demand for AI chips from data centres has driven its second-quarter revenue guidance to $11bn, well above analysts' estimates of $7.15bn.

Around two-thirds of the rise in demand for AI hardware will come from data centre servers, based on McKinsey's forecast.

Although silicon is the foundation of AI semiconductors, minor metals such as indium contribute to data centre server performance. Optical fibres and cables used to transmit data between servers and networking equipment are coated with indium tin oxide (ITO) to increase signal transmission and reduce losses. Indium phosphide (InP) is used in the production of high-speed photodetectors and laser diodes for optical communications. And Indium-based solder alloys can also be used in the production and assembly of electronic components in servers to enable precise and reliable soldering connections.

"The computer industry is going through two simultaneous transitions — accelerated computing and generative AI," according to Nvidia's founder and chief executive Jensen Huang. "A trillion dollars of installed global data centre infrastructure will transition from general purpose to accelerated computing as companies race to apply generative AI into every product, service and business process." Nvidia is "significantly increasing" output of its data centre products to meet growing demand, Huang said.

US-based Inflection AI said yesterday it has raised $1.3bn in financing from Microsoft, Reid Hoffman, Bill Gates, Eric Schmidt and Nvidia. It will use the funding to help build an AI cluster of 22,000 Nvidia GPUs, which is around three times more computing power than was used to train the ChatGPT-4 generative AI tool, and indicates the scale of potential chip volumes at play.

Nvidia's rival AMD plans to ramp up production of its new AI data centre chip in the fourth quarter and has introduced upgraded versions of other chip models to address AI demand.

With AI chips expected to be used in smartphones, laptops, vehicles, manufacturing robots, surveillance systems, and military hardware, minor metals consumption will be central to the technology transition.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
06/12/24

US House panel approves river infrastructure bill

US House panel approves river infrastructure bill

Houston, 6 December (Argus) — A US House of Representatives committee has approved a bipartisan bill that authorizes improvements to navigation channels by the Army Corps of Engineers (Corps) and maintenance and dredging of river and port infrastructure projects. The House Transportation and Infrastructure Committee advanced the Water Resources Development Act (WRDA) after several months of political wrangling to integrate earlier versions of the legislation approved by the House and Senate . The bill will head to the full House next week, said committee chairman Sam Graves (R-Missouri). This would be the sixth consecutive bipartisan WRDA bill since 2014 if passed by congress. WRDA is a biennial bill that authorizes the Corps to continue working on projects to improve waterways, including port updates, flood protection and supply chain management. WRDA will also "reduce cumbersome red tape", which will allow for quicker project turnarounds, Graves said. The bill authorizes processes to streamline work, he said. The bill also adjusts the primary cost-sharing mechanism for funding for lock and dam construction and major rehabilitation projects. The US Treasury Department's general fund will pay 75pc of costs, up from 65pc, with the rest coming from the Inland Waterways Trust Fund, which is funded by a barge diesel fuel tax. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Find out more
News

Tight supply fuels Indian interest in wire rod imports


06/12/24
News
06/12/24

Tight supply fuels Indian interest in wire rod imports

Mumbai, 6 December (Argus) — Interest in steel wire rod imports is increasing in India owing to limited domestic availability, delivery snags and high prices set by primary producers, according to industry sources. Unspecified quantities of Chinese low-carbon wire rod were booked for $515-520/t cfr Mumbai, excluding value-added tax, in the past few weeks, sources in both China and India told Argus . High-carbon wire rod was also heard to have been purchased from China recently, although this could not be confirmed. The booking follows reduced supply from state-controlled long products manufacturer Rashtriya Ispat Nigam (RINL), according to a Mumbai-based long products trading firm. RINL at present is grappling with financial difficulties and raw material shortages, which has taken a toll on its production. Many participants have questioned this purchase, as no Chinese mill has a Bureau of Indian Standards (BIS) certificate required for exporting wire rod to India. Non-BIS material can be cleared by customs only if the material is used to manufacture goods that will be exported. The booking has been made under the advance licence scheme, which allows for such non-BIS imports, a source said. But there are only a handful of wire manufacturers that export their product and can use imported wire rods, according to market participants. At a trade fair in Mumbai last month, wire manufacturers said they were increasingly seeking alternatives to domestic primary wire rod as high input costs were squeezing their margins. High-carbon wire rod was priced at 57,000-58,000 rupees/t ($672-684/t) by major domestic producers on a delivered basis in western India, sources said. Chinese offers stood at $570-580/t cfr India for high-carbon wire rod a few weeks ago, but have now fallen to $560/t cfr, a trading source said. Wire manufacturers focused on domestic sales were turning to secondary wire rod, which was nearly 20pc cheaper than primary material, according to a participant at the Mumbai trade fair. But trading companies and consumers pointed to availability as the bigger issue, with only a few major primary producers dominating the wire rod market. Securing a regular and timely supply of wire rod from primary mills has become a major challenge, causing supply chain disruptions for end-users, they said. "The price is one factor, but availability is also a key issue. Mills are unreliable when it comes to allocation and delivery of the material," a wire manufacturer said. "This has always been the case but not to the extent seen recently. Now supply concerns have become worse because of RINL's issues." RINL's finished steel output fell by 26pc on the year to 1.6mn t from April-October, according to provisional data from the steel ministry's joint plant committee. Another wire manufacturer said it had not imported wire rod for more than a year, but was now open to cheaper imports to protect its margins. For some finished products, such as automobile parts, it is essential to use wire rod from primary producers but imported or secondary material could be used to manufacture some other products, a manufacturing firm executive said. Long products amount to only a small portion of India's overall steel imports, which are dominated by hot-rolled coil and other flat products. From April-October this year, India imported about 49,300t of wire rod — including alloy, non-alloy and stainless steel products — an increase of more than 30pc on the year, according to data from the steel ministry's Joint Plant Committee. This made up less than 1pc of India's overall finished steel imports during the seven months. By Amruta Khandekar Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Newly agreed EU, Mercosur FTA faces uphill battle


06/12/24
News
06/12/24

Newly agreed EU, Mercosur FTA faces uphill battle

Montevideo, 6 December (Argus) — The EU and South America's Mercosur closed a free-trade agreement (FTA) nearly 25 years in the making, but there is still a long road to ratification. Uruguayan president Luis Lacalle and European Commission president Ursula von der Leyen announced the deal at a Mercosur summit in Montevideo, the Uruguayan capital. The presidents of the three other Mercosur founding members — Argentina, Brazil and Paraguay — were present. The FTA will remove tariffs on more than 90pc of goods among the members. Von der Leyen called the agreement a historic milestone that would benefit 700mn consumers. She said the agreement "is not only a trade agreement, but also a political necessity." Lacalle said "an agreement of this kind is not a magical solution, but an opportunity." Leaders recognized that the agreement still has major hurdles to clear as it requires approval from member states. The agreement will go to legal review and translation in the next month in view of its future signing, according to the Mercosur-EU declaration. While the Mercosur countries are in favor of the agreement, opposition is strong in France, Poland and several smaller EU states. Argentinian president Javier Milei, who supports the agreement, criticized Mercosur as a block. "Mercosur, which was born with the idea of deepening our commercial ties, ended up like a prison that does not allow its members to take advantage of their comparative advantages or export potential," he said. Van der Leyen said that more than 60,000 businesses, half of them small, export to Mercosur. The EU exported $59bn to Mercosur in 2023, while Mercosur's four founding members shipped $57bn to the EU. She also stressed the importance of EU investment in Mercosur, including in sustainable mining, renewable energy and sustainable forestry. Brazilian president Luiz Lula da Silva said during the summit that the region had to take advantage of its resources, including agriculture and energy. The four Mercosur countries are major food producers, including crops such as corn, soy and sugarcane, used for biofuels. Brazil is the world's top soy producer, while Argentina is third, Paraguay sixth and Uruguay in the 14th spot. Bolivia, which joined Mercosur in July, is the 10th producer. Brazil is a major mineral producer and Argentina is slowly beginning to strengthen its mining sector. It has the world's second-largest lithium resources. Argentina is also beginning to monetize its unconventional gas formation, Vaca Muerta, the second largest in the world with 308 trillion cf of reserves. It is working on different LNG projects, with a focus on exports to Europe. The Mercosur countries also have in common plans for low-carbon hydrogen production, which also see the EU as an export market for value-added products, such as fertilizers. By Lucien Chauvin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

US added 227,000 jobs in November


06/12/24
News
06/12/24

US added 227,000 jobs in November

Houston, 6 December (Argus) — The US added 227,000 non-farm jobs in November as hiring bounced back after two hurricanes and a strike dampened the prior month. Job gains for the prior month were revised higher to 36,000 from an originally reported 12,000, the Labor Department said today. Payroll employment increased by a monthly average of 186,000 jobs for the 12 months through November. The unemployment rate edged up to 4.2pc from 4.1pc and was higher than the 3.7pc rate a year earlier. The CME's FedWatch tool showed an 87pc probability the Federal Reserve will cut its target rate by a quarter point at its 19 December meeting, up from 70pc probability on Thursday. The Federal Reserve has signaled it will be cautious in determining the pace of further rate cuts next year after beginning to cut rates from two-decade highs this year as inflation slowed. Health care added 54,000 jobs, with leisure and hospitality adding 53,000. Government added 33,000 and transportation equipment manufacturing added 32,000 after the return of workers who were on strike. Retail trade lost 28,000. Manufacturing added 22,000, construction added 10,000 and mining and logging added 2,000. Average hourly earnings advanced by an annual 4pc. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

US Al can recycling rate rises in 2023


05/12/24
News
05/12/24

US Al can recycling rate rises in 2023

Houston, 5 December (Argus) — US consumers recycled cans at a slightly higher rate in 2023 than in 2022, but still below pre-Covid-19 levels. Consumers recycled 43pc of their aluminum cans — about 46bn cans — in 2023, up from 42pc in 2022 but still down from 46pc in 2019. They threw away about 61bn cans, which would be worth about $1.2bn, according to a report from the Aluminum Association (AA) and the Can Manufacturers Institute (CMI). US aluminum producers recycled 57pc of beverage can scrap in 2023, down from nearly 59pc the year before but up from 56pc in 2019. The closed-loop circularity rate for aluminum cans, which measures what percentage of recycled beverage containers is used to make new beverage containers, rose to 97pc in 2023 from 93pc in 2021. US aluminum producers reported that average new beverage can is made up of 71pc recycled material, including 33pc used beverage can (UBC) scrap. CMI members seek to achieve a total recycling rate of 70pc by 2030, 80pc by 2040, and 90pc by 2050. The CMI and AA are pushing for expanded access to deposit return systems (DRS), where consumers receive a small refund whenever they deposit UBCs in certain containers. Consumers recycle 77pc of cans in states with a DRS compared with 36pc of cans in states without one. The two associations did not offer any timeline on any new state or nationwide DRS but did predict that national DRS coverage would increase the recycling rate by 48 percentage points. By Cole Sullivan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more