AI-Powered Smartphones Could Offset a Data Center Downturn

If tech investors cool on data centers, could AI-powered smartphones fill the semiconductor industry’s void?

Doug Lefever, CEO of Nvidia supplier Advantest — the world’s biggest chip-testing machine provider — seems to think so, the Financial Times reported Wednesday (Dec. 25).

Lefever said demand for phones outfitted with artificial intelligence could help protect the semiconductor sector from a “vicious” downturn in data center spending, per the report.

Lefever is watching for any sign of reduced spending on AI by tech giants in the United States, as the likes of Meta, Google and Microsoft invest in data centers that can provide large amounts of computing power, the report said.

While a downturn could be short-lived, the market is so concentrated around big companies that “any slowdown in the data center buildout is going to have big reverberations in the supply chain,” Lefever said, per the report.

“I don’t like to use the word bubble because it implies that it’s going to go away, but there will be cycles,” Lefever said, according to the report. “When that next cycle comes . . . it could be pretty vicious.”

By contrast, demand for AI-powered phones has been “kind of slow” but could take off rapidly, Lefever said in the report.

PYMNTS examined what the future could look like earlier this week in a report on the promise of AI in retail, with AI assistants providing personalization and taking care of up 20% of eCommerce tasks, from product recommendations to customer service.

Lars Nyman, chief marketing officer at CUDO Compute, told PYMNTS this week that AI will transform retail next year by predicting consumer behavior with unprecedented accuracy and offering personalization that might seem unsettlingly prescient.

“AI-driven personalization will go full Black Mirror in some cases, where your virtual assistant might ask, ‘Are you sure you don’t need those hiking boots before your Yellowstone trip next month?’” Nyman said.

He also predicted AI will help retailers reduce inventory costs by up to 10% through improved demand forecasting, pointing to McKinsey research. But with this enhanced personalization comes challenges.

“Consumers will demand transparency on how their data is used,” Nyman said, suggesting a renewed debate around data privacy as AI makes shopping more intimate but also possibly more invasive.

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