Semiconductor chips are a critical element of the artificial intelligence industry. They provide the hardware infrastructure required to meet modern AI systems' computational needs, scalability, and energy efficiency. As AI evolves, the semiconductor industry will play a critical role in shaping the capabilities of AI technologies.

Semiconductor chip components can be classified as active and passive elements. Transistors are the core of a chip and consist of three key components: source, gate, and drain. They are used to amplify or switch electrical signals.

A chip's main functions are data processing, data storage, signal transmission, and input/output (I/O) operations.

There are two types of chips: digital and analog. Analog chips accept continuous signals, such as sound or light, and perform basic functions like turning on a flashlight when a button is pressed. Digital chips are based on binary values: 1 or 0. They are more complex and the most common.

The digital chip market can be split into two categories: Logic Chips (CPUs, GPUs, FPGAs, ASICs) and Memory Chips.

Silicon wafers are formed from raw materials (most often silicon) and undergo steps such as deposition, coating, lithography, etching, ionization, cleaning, chemical and mechanical polishing, testing, and other equally important steps.

Specialized equipment is required to perform all of the above operations.

The chips are then tested and packaged before becoming part of a computing system.

Chips are designed by so-called Fabless Chip Firms, which often do not have their own production facilities. These firms include NVIDIA, Qualcomm, AMD, Mediatek, Marvell, Broadcom, and others. According to various estimates, Nvidia is the undisputed leader in AI chip development, accounting for between 70% and 95% of all sales.

Fabless Chip Firms are outsourcing the AI chip manufacturing function to semiconductor factories. TSMC makes over 60% of all chips worldwide for over 500 companies, including Nvidia, Apple, AMD, Broadcom, Marvell, MediaTek, Qualcomm and others.

It should be noted that some companies are developing and manufacturing AI chips. These include Samsung, Intel, Micron Technology, and Texas Instruments. Such companies are called integrated manufacturers.

In October 2022, the US Department of Commerce imposed controls that require licenses to export to China and Macau certain advanced logic and other chips that can be used to train AI models and build supercomputers. However, because many AI models are trained using cloud services, Congress may consider export control reform allowing the Commerce Department to oversee cloud service providers that sell access to large amounts of computing power.

In August 2022, President Biden n signed P.L. 117-167, known as the CHIPS and Science Act. The Act will provide $39B to expand domestic semiconductor manufacturing capacity, $13.2B for research and development of next-generation semiconductor technologies, and $500M for national information security. According to an official White House statement, in August 2023, the companies announced investments of more than $395B in semiconductors and electronics and the creation of more than 115,000 jobs.