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Artificial Intelligence Growth And Use In Semiconductors

  • Specialized Chip Demand: The demand for Artificial Intelligence specific chips is soaring. In 2023, advanced AI chips were selling for approximately US$40,000 each, with a strong demand for a million or more units. This trend is expected to persist into 2024, with manufacturers struggling to meet the overwhelming demand. 1
  • Potential Revenue Increase: By harnessing AI, the semiconductor industry could potentially see an increase in earnings before interest of $85-$95 billion annually by 2025. This huge potential underscores the importance of integrating AI into semiconductor manufacturing processes. 1
  • The global Artificial Intelligence Chip market generated USD $14.68 billion revenue in 2022 and is projected to grow at a CAGR of 38.16% from 2023 to 2032. The market is expected to reach USD $372.01 billion by 2032. 2
  • The global semiconductor market size was valued at $611.35 billion in 2023 & is projected to grow from $681.05 billion in 2024 to $2.06 trillion by 2032. 3
  • The Taiwan Semiconductor Manufacturing Company (TSMC) makes all of the world’s advanced AI chips. Most importantly, Nvidia’s GPU’s; it also includes the Ai chips for Google, AMD, Amazon and Microsoft. 4
  • Modern artificial intelligence simply would not be possible without these highly specialized chips. Every important AI breakthrough over the past decade, from AlphaGo to AlphaFold to Midjourney to ChatGPT—rely on these chips. 4

1. J2 Sourcing   2. The Brainy Insights  3. Fortune Business Insights  4. Forbes

DATA STORAGE: Microsoft’s Project Silica

  • Project is designed to move data storage from magnetic based chips to silica-based glass plates. 1
  • Resistant to electromagnetic pulses and environmentally friendly due to their extensive lifespan compared to legacy data storage. 1
  • Increased lifespan from magnetic based storage (5-10 years) to potentially thousands of years on glass. 2
  • Increased data storage capabilities of several terabytes. For example, 1.75m songs on a plate the size of a drink coaster. 2

1. Microsoft  2. AI Business

Global REE Demand

CHINA DOMINATES THE MARKET
  • China accounted for 70% of world mine production of rare earths in 2024. 1
  • China is home to at least 85% of the world’s capacity to process rare earth ores. 2
  • The United States sources most of its rare earth imports from China.
  • The U.S. government announced that Canadian companies can be eligible for the Defence Production Act that will be awarded as grants, not loans, to companies that can help secure domestic REE supply. 3
  • Canada & the U.S. signed a Memorandum of Understanding confirming Canada’s participation in the U.S.-led Energy Resource Governance Initiative (ERGI), part of a multi-pronged strategy by Washington to break free of China’s near-monopoly on so-called critical energy minerals. 4

1. https://investingnews.com/daily/resource-investing/critical-metals-investing/rare-earth-investing/rare-earth-metal-production/
2. https://www.areadevelopment.com/logisticsinfrastructure/q4-2024/the-battle-to-break-chinas-rare-earth-supply-chain-dominance.shtml
3. https://www.defense.gov/News/Releases/Release/Article/3777044/department-of-defense-awards-147-million-to-enhance-north-american-cobalt-and-g/
4. https://www.canada.ca/en/natural-resources-canada/news/2019/12/canada-joins-the-energy-resource-governance-initiative.html

Domestic Opportunity

Market Size Outlook

(USD Million)

2017: USD $6,898.00 Million

Rare Earth Metals Market

SHARE BY APPLICATION (USD MILLION)

Permanent Magnets Segment

2017: USD $1,972.83 Million

Market growth will ACCELERATE at a CAGR of

8.3%

Growth contributed by APAC

72%

Growth for 2023

8.1%

Incremental growth ($M)

4932.67

The market is FRAGMENTED with several players occupying the market

Industry Leaders

MP Materials (NYSE: MP)

  • The only operating mine in North America
  • $4B Market Cap
  • Public Through Chamath Palipathya SPAC

Lynas Rare Earths (ASX: LYC)

  • First Rare earth refinery to be built in North America, shifting away from China.

  • $6.85B Market Cap.

  • $258M contributed from US government.

Source: https://www.marketsandmarkets.com/Market-Reports/rare-earth-metals-market-121495310.html

Supply Chain Headlines

Energy Resources Governance Initiative (ERGI)

Canada and the U.S. signed a Memorandum of Understanding confirming Canada’s participation in the U.S.-led initiative as part of a multi- pronged strategy by Washington to break free of China’s near-monopoly on so-called critical energy minerals.

US Government announces Canadian companies can be eligible for the Defence Production Act that will be awarded as Grants, not Loans, to companies that can help secure domestic REE supply.

Sources: https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/24/joint-statement-by-president-biden-and-prime-minister-trudeau/ and https://www.cbc.ca/news/politics/critical-minerals-biden-trudeau-1.6790933 and https://www.cbc.ca/news/world/u-s-military-mining-projects-canada-1.6649522

Three Strategic Objectives:

  1. Engage resource-rich countries on responsible energy minerals governance.
  2. Support resilient supply chains.
  3. Meet the expected demand for clean energy technologies.

Source: https://ca.usembassy.gov/united-states-and-canada-sign-memorandum-of-understanding-on-critical-energy-minerals/#:~:text=The%20new%20MoU%3A%201

Canada and USA to partner in semiconductor “Chip Corridor” between the two countries

Sources: https://globalnews.ca/news/9403453/trudeau-three-amigos-semiconductors-north-america/ and https://www.reuters.com/technology/us-canada-plan-north-american-chip-corridor-starting-with-ibm-expansion-2023-03-24/

Malaysia to ban exports on rare earths

Source: https://www.bnnbloomberg.ca/malaysia-seeks-to-develop-ban-on-exports-of-rare-earths-1.1969758

The Canadian government will spend C$250 million on its domestic semiconductor industry to boost research and development and manufacturing, the prime minister’s office said in a statement.

Click image to enlarge
  • An electric vehicle (EV) uses 1kg to 3kg of neodymium-iron-boron (NdFeB) magnets in standard drivetrain motors.
  • NdFeB magnets are 93% of all electric vehicles. Tesla, GM, Ford, VW, Hyundais, Toyota and others build vehicles using these magnets.
  • Every ten million new EV’s require ~10,000 tonnes of additional neodymium or ~20% of current annual global supply. Over 70 million electric vehicles are expected to be sold when internal combustion engine vehicles are phased out.

Source: MP Materials, Morgan Stanley, CRU

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