Global Artificial Intelligence (AI) Hardware Market – Types, Applications and Industry Sectors

Artificial Intelligence (AI) Hardware Market Trends and Outlook

Given the significance AI has garnered over the past few years, a number of trends are shaping its performance in the hardware market. The focus on embedding AI capabilities into edge devices, such as smartphones, IoT sensors and vehicles has been growing, owing to which the demand for low-power, high-performance chips, such as edge-optimized GPUs and ASICs has also been increasing. Several companies have seized the initiative in designing customized chips for specific AI workloads (e.g., Google's TPUs & Microsoft's Maia) for improving efficiency and performance, because of which dependence on general-purpose GPUs has reduced. Neuromorphic chips, inspired by the human brain, are another aspect of AI Hardware gaining potentiality of providing better efficiency in cognitive tasks for applications in robotics and autonomous systems.

Another major trend relates to innovations in chip architecture and cooling systems, which is being prioritized to develop energy-efficient hardware for industries targeting reduction of their carbon footprint in AI operations. However, stymying this progressive scenario is the unprecedented level of tariffs now being imposed by the incumbent United States government under President Trump on a number of countries, including China, Taiwan and Vietnam, all major chip producers and exporters. This will undeniably lead to a steep rise in the cost of AI servers, laptops and GPUs to further impact demand negatively.

Global market size for AI Hardware is estimated at US$25 billion in 2024 and is likely to register a 2024-2030 CAGR of 20.5% in reaching a projected US$76.7 billion by 2030. One of the major factors propelling demand for AI Hardware includes growing demand for AI applications. An increase in the use of AI across industries, such as healthcare (for diagnostics), automotive (for autonomous vehicles) and retail (for personalized suggestions) has been driving the demand for effective hardware that can support complex algorithms and real-time processing. Further expansion is being enabled by innovations in chip design, such as smaller, more energy-efficient transistors and specialized AI accelerators that allow faster and more efficient computation.

AI-optimized solutions have also gained in demand owing to an exponential growth of data from IoT devices, cloud services and digital platforms, requiring hardware that can handle large-scale processing and analytics. High-tech companies, such as Googe, Microsoft, NVIDIA, Intel and Qualcomm have also been investing heavy amounts towards R&D with the goal of developing cutting-edge AI hardware, further accelerating innovation and market growth. Edge computing is a concept that processes data closer to its source, as in the case of smart devices or autonomous systems, for which compact, efficient AI hardware specific for edge environments is needed, making it another fueling demand for AI hardware.

AI Hardware Regional Market Analysis

With an estimated share of 34% in 2024, North America is the largest global market for AI Hardware. The region is home to major tech giants, such as NVIDIA, Intel, AMD, Apple, Google and IBM, which are prominent producers of AI hardware, such as GPUs and TPUs, in addition to investing heavily in research & development, thereby driving market growth. Statistics indicate that NVIDIA controls over 90% of the worldwide market for data center GPUs. In terms of R&D investment, innovations in AI are being substantially funded by private and public investments, with about 25% of US startup investments in 2023 going to companies engaged in AI. Government initiatives, such as the CHIPS Act, have further boosted semiconductor advancements by contributing almost US$100 million for sustainable chip materials. The adoption rate of AI across industries in North America is also quite rapid, with AI hardware being integrated across the IT, telecommunications, healthcare and automotive sectors. Leading among these is the IT & Telecommunications sector that has been adopting AI hardware for sustaining cloud computing and data centers.

AI Hardware Market Analysis by Type

Other than being the largest, with a 2024 share estimated at 55.3%, the global market for Processors in AI Hardware, including GPUs, TPUs, CPUs & ASICs, is also anticipated to be the fastest growing, likely to register a compounded annual rate of 22% between 2024 and 2030. Managing compute-intensive tasks, such as training and inference for machine learning models, has rendered Processors to become the mainstay of AI systems, with GPUs standing a head above other types of Processors. The significance of these devices in the areas of automotive, finance, healthcare and IT is well-recognized. Instances of the same comprise the use of CPUs and GPUs to power data centers for cloud-based AI services and utilizing ASICs and TPUs in specific applications, such as autonomous vehicles and Google's AI services. Another major factor for the dominance of Processors is the range of chips on offer (GPUs, CPUs, ASICs, FPGAs and TPUs) that can fulfil diverse AI requirements, such as training, inference, edge computing and real-time processing, which allows to cover a wide spectrum of the market.

AI Hardware Market Analysis by Application

Machine Learning (ML) constitutes the primary application for AI Hardware on a worldwide basis, estimated to account for a share of 41.8% in 2024. In addition, the market for AI Hardware in this application area will also register the fastest 2024-2030 CAGR of 21.7%. ML is considered to be the heart of AI systems in terms of reinforcing most AI applications, such as deep learning, neural networks and predictive analytics, all of which need massive computing power. This further drives the requirement for AI hardware, such as GPUs, TPUs and ASICs. The adoption of ML across a broad range of industries has also become quite common, including in automotive for autonomous driving, finance for fraud detection, healthcare for diagnostics and retail for recommendation systems. Studies have indicated that in 2023, nearly 70% of global organizations have taken recourse to ML for data analytics, which has further propelled hardware demand for training and inference.

AI Hardware Market Analysis by Industry Sector

With an estimated share of 33.3% in 2024, the global demand for AI Hardware by sector is led by IT & Telecommunications, a key factor for which is high demand for data processing. AI hardware forms a major component of this sector, allowing enormous data volumes generated by cloud computing, 5G networks and IoT devices to be processed efficiently. The major players in the IT & telecom sector, such as AWS, Microsoft Azure and Google Cloud make wide use of AI hardware for AI-as-a-service (AIaaS) platforms, with about 60% of worldwide data center AI hardware spending in 2023 being accounted for by this area, courtesy the deployment of NVIDIA GPUs and Intel AI chips by hyperscale data centers. AI hardware is widely used for real-time network management, predictive maintenance and 5G optimization by telecommunications companies, as in the case of AI processors handling traffic routing and detecting anomalies that further need high-performance chips. The integration of AI by IT & telecom firms into customer service (chatbots), cybersecurity (threat detection) and operational efficiency (automation) are necessitating the demand for diverse AI hardware, ranging from edge processors for IoT to ASICs for specialized tasks, giving credence to the sector's leading market position.

Artificial Intelligence (AI) Hardware Market Report Scope
This global report on Artificial Intelligence (AI) Hardware analyzes the market based on hardware type, application type and industry sector for the period 2021-2030 with projections from 2024 to 2030 in terms of value in USD. In addition to providing profiles of major companies operating in this space, the latest corporate and industrial developments have been covered to offer a clear panorama of how and where the market is progressing.

Key Metrics
Historical Period: 2021-2023
Base Year: 2024
Forecast Period: 2024-2030
Units: Value market in US$
Companies Mentioned: 14

Artificial Intelligence (AI) Hardware Market by Geographic Region
• North America (United States, Canada and Mexico)
• Europe (Germany, United Kingdom, France, Italy, Netherlands, Spain, Russia, Switzerland and Rest of Europe)
• Asia-Pacific (China, Japan, India, Australia, Singapore, South Korea and Rest of Asia-Pacific)
• South America (Brazil, Argentina, Colombia, Chile, Peru and Rest of South America)
• Middle East & Africa (United Arab Emirates, South Africa, Egypt, Saudi Arabia, Morocco, Kuwait, Qatar and Rest of Middle East & Africa)

Artificial Intelligence (AI) Hardware Market by Hardware Type
• Processors
• Network
• Memory
• Storage

Artificial Intelligence (AI) Hardware Market by Application Type
• Machine Learning
• Computer Vision
• Natural Language Processing
• Expert Systems

Artificial Intelligence (AI) Hardware Market by Industry Sector
• IT & Telecommunications
• BFSI
• Healthcare
• Retail
• Automotive
• Others

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