AI boom draws chip supply from other end-markets, Siltronic CEO says

AI Boom Drives Semiconductor Supply Toward Data Centers, Says Siltronic CEO

AI Demand Reshapes Semiconductor Industry and Supply Chains

By Ozan Ergenay

Nov 4 (Reuters) - An AI chip boom is redirecting semiconductor supply toward data centres and away from smartphones and PCs, constraining some end markets, Siltronic CEO Michael Heckmeier said on Wednesday.

Siltronic's Sales Forecast and Market Impact

Siltronic, which makes silicon wafers used in semiconductors, raised its annual sales forecast for the second time this year on Wednesday, citing stronger demand for its wafers.

AI as the Chip Industry's Main Growth Engine

AI-linked demand has become the chip industry's main growth engine, but Heckmeier told Reuters in an interview that some other semiconductor end markets could grow faster if more chips were available.

"It's not that AI is offsetting certain weaknesses," Heckmeier said. "It's more AI is generating a certain weakness."

Supply Allocation and Market Constraints

Demand for AI-related chips remains so strong that semiconductor manufacturers are allocating more supply to those applications, leaving less capacity for other end markets.

"When our customers have the choice to sell their chips to different segments, they will always send them to the ones that pay best," he said. "The pockets of the AI players, particularly the hyperscalers, are the deepest."

AI Servers and Silicon Wafer Demand

The trend has made AI servers the industry's main growth engine, with the impact extending beyond higher server volumes.

Heckmeier said AI server farms consume roughly three to four times more silicon area than traditional servers, boosting demand for advanced wafers

Future Outlook for Semiconductor Markets

Any moderation in AI demand would not necessarily derail the industry's growth, Heckmeier said, because capacity could flow back to smartphones, PCs and other markets where underlying demand remains solid.

"We don't see it at all today," Heckmeier said of any slowdown in AI demand.

"But even if it came, we feel there is a natural balance in the system that the overall growth dynamics could go on."

(Reporting by Ozan Ergenay in Gdansk, Editing by Tasim Zahid)