chipmakers hail arrival of AI PCs

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The titans of the chip industry descended on Taiwan this week to lay claim to an “AI PC revolution” that promises the biggest advance in decades in how consumers and office workers interact with their personal devices. 

The annual Computex conference has been the venue for an unprecedented gathering of the chief executives of Nvidia, Intel, AMD, Qualcomm and Arm, who gave speeches featuring flashy AI-generated videos and publicity stunts to prove that their technology behind chips for artificial intelligence-enabled PCs — many of which are manufactured in Taiwan — was the most powerful and efficient.

Computex was “the most vocal opportunity for each of the chipmakers to tell their own AI PC story”, said Ian Cutress, chip analyst at consultancy More Than Moore, ahead of what industry experts are forecasting will be a surge in demand for AI PCs in the coming months.

These notebook and desktop computers are embedded with specialised silicon to run AI applications such as digital assistants and software that can generate everything from code to videos on the device itself, rather than relying on cloud services.

“When I think about the PC market, this is the most exciting moment in 25 years since the arrival of WiFi,” said Intel CEO Pat Gelsinger, in a speech that also featured a chatbot saying its products were more price competitive than its rivals. Qualcomm chief Cristiano Amon went further, saying the PC industry was being reborn, with the AI PC the most important development since Microsoft’s Windows 95 operating system.

Microsoft kick-started the AI PC race when it unveiled a series of AI-enabled personal computers in May. The devices going on sale this month will be equipped with Copilot, Microsoft’s flagship AI assistant, and include a new “recall” tool that can rapidly retrieve what users have viewed on their machines by saving snapshots of their screens periodically.

It selected Qualcomm to be its first AI chip supplier, despite its Arm-based processors having a small fraction of PC sales in a Windows market traditionally dominated by Intel and AMD and their rival x86 architecture.

Analysts say Microsoft aims to encourage more competition. Cutress said Qualcomm was “more willing to be agile” to Microsoft’s technical demands in order to gain a foothold in PCs and diversify from its traditional domain of smartphones.

Qualcomm’s Amon hailed the collaboration as a “history” defining moment marrying its chip with Microsoft’s software to bring “a new era for the PC”. He said the company had “never got any credit as a computing company”.  

But Intel and AMD are not far behind in deploying their AI chips in PCs. AMD unveiled two new processors at Computex for AI PCs, which will start shipping in volume at the end of next month. Intel’s Lunar Lake processor, its flagship chip targeting AI PCs, is expected to arrive this year.

“Considering their [Intel and AMD’s] decades-old close relationships with PC makers, I suspect that they would adapt the best to the AI PC market,” said Rakesh Kumar, professor of electrical and computer engineering at the University of Illinois Urbana-Champaign.

The rush to bring out products in Taipei for the “AI revolution” appeared designed to steal a march on Apple’s annual Worldwide Developers Conference, which begins on Monday in Silicon Valley and is expected to debut a range of AI features for products powered by in-house chips. 

The frenzied activity comes just as the PC market is recovering, with 3.2 per cent year-on-year growth in shipments in the first quarter, according to research group Canalys. There had been two years of weak sales following a boom from the shift to working from home during the Covid-19 pandemic.

Morgan Stanley analysts said AI PCs would be key contributors to the next leg of PC market growth as penetration rises from 2 per cent in 2024 to 65 per cent in 2028 and as companies opt for PCs that run AI applications on the device as a cheaper, more secure and flexible option than in the cloud.

Kumar said the PC market should also “watch out for Nvidia”, even though its main focus is now entrenching its lead in AI processors for data centres. Nvidia started out as a chipmaker for gaming PCs, but the AI boom has led to 87 per cent of its $26bn in sales coming from data centre products in the first quarter of this year.

Kumar said Nvidia could “leverage their GPU [graphics processing unit] advantage” to be “competitive in the AI PC market”. Microsoft has already announced that it will use its GPUs in future AI PCs.

Smaller hardware makers are also piling into the new market, with dozens of consumer electronics manufacturers from Taiwan and China using Computex to showcase accessories altered to integrate AI software, including keyboards and headsets with special Copilot buttons to bring up the application.

Despite the AI upgrade push, analysts question whether consumer demand will be strong enough to justify the higher price tags for more powerful hardware.

“What drives people to upgrade their devices is increased productivity,” said Cutress. “Do these devices enable you to work faster? We’re at the point where the hardware is there. But we’re still yet to see whether there is software that can answer this question.”

Additional reporting by Camilla Hodgson in London