According to recent TrendForce research, the surging demand for artificial intelligence (AI) servers is driving the four major North American cloud service providers (CSPs) to accelerate their in-house development of application-specific integrated circuit (ASIC) chips. This shift toward custom chip solutions addresses the specialized needs of AI workloads. On average, these CSPs release upgraded ASIC versions every one to two years, reflecting intense sector competition and innovation. The report highlights evolving dynamics in the global AI server chip market, focusing on differences between North America and China. North American CSPs increasingly prioritize proprietary chip development to optimize performance, reduce third-party dependency, and gain greater control over their AI infrastructure. Conversely, China’s AI server market is experiencing transformation fueled by market forces and government policies. Currently, a large portion of AI server chips in China come from international suppliers like NVIDIA and AMD. TrendForce projects that externally sourced chips’ share will drop from about 63% in 2024 to roughly 42% in 2025, signaling a shift away from foreign reliance amid geopolitical and economic concerns. Simultaneously, China’s domestic chip manufacturing sector is growing rapidly, supported by national policies promoting innovation and semiconductor self-sufficiency through financial incentives, R&D support, and strategic initiatives.

Consequently, local chip producers are expected to capture 40% market share by 2025—nearly matching the share of imported chips—indicating China’s potential emergence as a major AI server chip player. This domestic chip development aligns with China’s broader goals to lessen dependence on foreign technology amid global trade uncertainties and secure strategic positioning in critical technology fields. Government support is enhancing semiconductor manufacturing, design expertise, and AI chip innovation, collectively boosting local companies’ competitiveness. Globally, these trends reveal a pivotal transformation in AI infrastructure: North America’s focus on customized in-house ASICs reflects a drive for performance optimization, while China’s expanding domestic chip industry underscores a push for technological self-reliance and market growth. The accelerated ASIC upgrade cycles by leading North American CSPs and China’s rapid local AI chip market growth highlight the dynamic, fiercely competitive AI computing ecosystem. Companies must continuously innovate to maintain leadership and meet growing AI computational demands. Looking ahead, analysts expect these movements to spur advancements in AI hardware capabilities, affecting data center designs and AI service performance across sectors. The rise in China’s domestic chip use, alongside bespoke North American solutions, may also foster diverse technological standards and ecosystems globally. In conclusion, TrendForce’s findings offer key insights into the shifting AI server chip market landscape. The notable increase in North American in-house ASIC development and the significant expansion of China’s local chip suppliers illustrate how AI infrastructure’s strategic importance is reshaping the semiconductor industry. These developments are likely to drive ongoing innovation, competition, and strategic realignments worldwide in the coming years.