AI Boom Is Siphoning Chip Supply From Phones and PCs, Siltronic CEO Says

Siltronic CEO Michael Heckmeier said Wednesday that the AI chip boom is redirecting semiconductor supply toward data centers and away from smartphones, PCs and other end markets. That shift is constraining some segments, he told Reuters. Siltronic, which makes silicon wafers used in semiconductors, raised its annual sales forecast for the second time this year, citing stronger wafer demand. Heckmeier said AI isn't just offsetting weakness elsewhere—it's creating it.

Chipmakers are sending more supply to AI applications because that's where the best money is, according to Heckmeier. When customers can sell chips to different segments, they choose the ones that pay best, he said. The pockets of AI players, especially hyperscalers, are the deepest. That leaves less capacity for other end markets.

AI servers have become the chip industry's main growth engine, and the impact goes beyond higher server volumes. Heckmeier said AI server farms consume roughly three to four times more silicon area than traditional servers. That boosts demand for advanced wafers, which Siltronic supplies.

A moderation in AI demand wouldn't necessarily derail the industry's growth, Heckmeier said. Capacity could flow back to smartphones, PCs and other markets where underlying demand remains solid. He said he sees a natural balance in the system that could keep overall growth dynamics going.

For now, Heckmeier doesn't see any slowdown in AI demand at all. The second forecast raise this year shows how AI-linked demand is driving the chip supply chain. If AI demand ever cools, phone and PC makers could get more breathing room—but that's not happening today.