Bain report cautions new global chip shortage possible due to increased AI demand
A recent industry report suggests that a significant increase in global demand for AI-focused semiconductors in the years ahead may trigger the next wave of chip shortages.
TroibNews 
A forecasted increase in global demand for semiconductors tailored for artificial intelligence in the upcoming years may result in another chip shortage, as highlighted in a recent industry report.
According to an annual report released on Wednesday by Boston-based consultancy Bain & Company, the global market for AI-related hardware and software is anticipated to grow between 40 percent and 55 percent annually, potentially reaching between $780 billion and $990 billion by 2027.
"Companies are moving beyond the experimentation phase and are beginning to scale generative AI across the enterprise," said David Crawford, chairman of Bain's global technology practice, in a press release.
The report suggests that elevated demand for graphics processing units (GPUs) from data centers—essential for training large AI models—as well as from AI-enabled smartphones and laptops could lead to another chip shortage. It forecasts that an AI-driven surge in GPU demand alone could boost total demand for certain upstream components by 30 percent or more by 2026.
"These trends, when paired with geopolitical tensions, could trigger the next shortage of semiconductors," Bain warned.
A previous global chip shortage occurred during the COVID-19 pandemic, largely due to supply chain disruptions and heightened demand for consumer electronics. This crisis had a significant impact on various industries, particularly the automotive sector.
The report's authors emphasized the "incredibly complex" nature of the semiconductor supply chain, noting that a demand increase of around 20 percent or more is likely to disrupt the equilibrium and lead to a chip shortage.
They pointed out that the surge in AI across significant end markets could easily exceed that threshold, creating vulnerable choke points throughout the supply chain.
In light of these developments, Bain advised chip suppliers and buyers to "act quickly to get ahead of this next, potentially massive crunch," given the challenges in balancing semiconductor supply and demand in an industry characterized by rapid technological advancements, substantial capital requirements, and lengthy lead times for production capacity expansion.
Max Fischer for TROIB News
According to an annual report released on Wednesday by Boston-based consultancy Bain & Company, the global market for AI-related hardware and software is anticipated to grow between 40 percent and 55 percent annually, potentially reaching between $780 billion and $990 billion by 2027.
"Companies are moving beyond the experimentation phase and are beginning to scale generative AI across the enterprise," said David Crawford, chairman of Bain's global technology practice, in a press release.
The report suggests that elevated demand for graphics processing units (GPUs) from data centers—essential for training large AI models—as well as from AI-enabled smartphones and laptops could lead to another chip shortage. It forecasts that an AI-driven surge in GPU demand alone could boost total demand for certain upstream components by 30 percent or more by 2026.
"These trends, when paired with geopolitical tensions, could trigger the next shortage of semiconductors," Bain warned.
A previous global chip shortage occurred during the COVID-19 pandemic, largely due to supply chain disruptions and heightened demand for consumer electronics. This crisis had a significant impact on various industries, particularly the automotive sector.
The report's authors emphasized the "incredibly complex" nature of the semiconductor supply chain, noting that a demand increase of around 20 percent or more is likely to disrupt the equilibrium and lead to a chip shortage.
They pointed out that the surge in AI across significant end markets could easily exceed that threshold, creating vulnerable choke points throughout the supply chain.
In light of these developments, Bain advised chip suppliers and buyers to "act quickly to get ahead of this next, potentially massive crunch," given the challenges in balancing semiconductor supply and demand in an industry characterized by rapid technological advancements, substantial capital requirements, and lengthy lead times for production capacity expansion.
Max Fischer for TROIB News
