Nvidia Supplier Warns of Potential AI Spending Slowdown Impacting Semiconductor Industry

Advantest CEO highlights risks of reduced data center investments by Big Tech and the possible role of AI-powered smartphones in mitigating a downturn.

Doug Lefever, CEO of Advantest, cautioned that a slowdown in AI spending by major tech firms like Microsoft, Meta, and Google could trigger a "vicious" downturn in the semiconductor industry.
The semiconductor sector heavily relies on Big Tech's investments in data centers, which are critical for AI infrastructure, with hyperscalers expected to spend $222 billion on AI chips and data centers by year-end.
Lefever noted that the cyclical nature of the market could lead to significant supply chain disruptions if spending declines, though such downturns may be short-lived.
AI-powered smartphones, while currently experiencing slow adoption, are being viewed as a potential growth area, especially if a breakthrough application drives consumer demand for new devices.
Despite concerns, Advantest has seen strong demand for its chip-testing equipment, with its stock price surging over 70% this year due to the increasing complexity of semiconductors.