The global semiconductor industry is undergoing complex changes. The slowdown in data center investment and the rise in demand for artificial intelligence mobile phones constitute a delicate game. This article will analyze Advantest CEO Doug Lefebvre’s interpretation of the current market situation, explore the impact of slowing data center investment on the semiconductor industry, and the potential positive effects of demand for artificial intelligence mobile phones, and gain an in-depth understanding of Advantest as an industry leader position in this change and coping strategies.
Doug Lefebvre, chief executive of Advantest, the world's largest supplier of chip testing equipment, said demand for artificial intelligence (AI) smartphones could help some parts of the semiconductor industry avoid "if data center investment slows" The impact of a vicious recession.
LeFevre said he is watching closely to see if spending by big U.S. tech companies on AI slows. Meta, Google and Microsoft have been major investors in data centers, which provide massive amounts of computing power.
Lefebvre said the data center construction slowdown "probably won't last too long and then may recover, but because of the high concentration of [hyperscalers] in the market right now, any slowdown in data center construction will be in the supply chain." have a huge impact.”
"I don't like to use the word bubble because it implies that it will go away but there will be cycles," he warned, adding that "when the next cycle comes... it could be very dramatic."
In contrast, Lefevre said demand for AI-powered smartphones has been "a little slow" but could take off quickly. "Everyone is holding their breath waiting for the killer app for AI phones... If that happens and people start replacing their phones, it will be crazy."
Tokyo-based Advantest is a key test equipment supplier for Nvidia's high-end graphics processing units and one of the biggest beneficiaries of rapid growth in semiconductor demand. The company controls more than half of the semiconductor testing market, and as chips become more advanced and expensive, demand for its services has soared.
That dominance has seen its shares rise more than 80% in the past year and about 500% in five years. The recent decline in December has been attributed to concerns that incoming President Donald Trump will adopt a tougher policy on China.
While Japan has lost its lead in chip production in the 1980s, Advantest is part of a cluster of Japanese semiconductor equipment and materials companies that occupy niche but essential segments of the supply chain. dominant position.
Lefebvre said a complete advanced chip might now be tested 10 to 20 times by Advantest's machines, from wafer dicing to final assembly. Five years ago, this number was in the single digits.
Testing times have also been extended, with Nvidia's latest Blackwell products taking three to four times longer than the previous generation. This gave Advantest the confidence in October to raise its net profit target by 16% to 122 billion yen ($792 million) for fiscal 2024.
Continued demand for the Advantest machines - which cost $1 million each and have more parts than a commercial aircraft - is unlikely to abate anytime soon. The company focuses on high-end performance testing and has more than 60% market share in some categories, according to analysts.
The company operates in 18 countries, but still gets 20% to 25% of its revenue from China. Lefebvre said he was satisfied with that, despite the recent decline in levels.
The company has not been directly affected by U.S. restrictions aimed at limiting China's ability to produce advanced technology, in part because sanctions tend to target the ability to make the chips themselves.
Lefebvre expects that even if China is completely excluded, demand elsewhere will be enough to make up for the losses. When a major Chinese company was recently sanctioned, other customers were quick to make up for the lost sales, he said. "We thought it might take a year, but it turned out to be just a few months," he said. "It's pretty remarkable."
All in all, despite the challenges posed by the slowdown in data center investment, the potential demand for AI smartphones and Advantest's leading position in high-end chip testing provide strong support for its future development. The company remains cautiously optimistic about the market outlook and is confident in dealing with potential risks and challenges.