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Data Centers Need for Chips Keeping Demand High

As the smartphone market becomes saturated in many countries around the world. Chip makers have been worrying about what will happen to the demand for their products. People will always need to replace and upgrade phone. Chip makers are looking for increased demand to keep driving profits for their customers.

Fortunately, as the demand for smartphone starts to reach its peak, growth of data centers and their need for advanced chips is starting to take off. Major companies like Google, Microsoft, Facebook, and Amazon are all relying on large numbers of advanced chips to be able to gather and compile all the information that they have.

This is used for not only their primary customer services, but also their ad networks. These networks use complex algorithms to match up advertisements with consumers based on their interests. This helps to improve conversion rates. This all must be done in near-real time to ensure the right ads are shown to the right people to maximize results.

Mehdi Hosseini is an analyst at Susquehanna Financial Group and commented on how chipmakers were primarily focused on smartphone makers. “Over the last decade the semiconductor industry was at the mercy of the Apple product cycle.” With non-smartphone based demand, chipmakers are able to better diversify what they are producing. And also keep their demand up throughout the year.

The demand applies not only to CPU chips, but also GPUs, RAM, and even storage devices. Requirements for all of these things is expected to increase dramatically as consumers are using more and more technology. Users are also engaged in more advanced activities that require greater computing power.

How Long will Demand Continue

As of now, there is no obvious end in sight for the amount of chips that will be needed to meet global needs. One problem some analysts worry about, however, is that the demand may suddenly dry up with little lead time. This could happen in the event that the processing needs stabilize. Businesses slow their demand for upgrades, or economic problems surface causing a slowdown in demand.