The artificial intelligence chip market is experiencing unprecedented growth, with industry leader Nvidia maintaining its dominant position while competitors like AMD and TSMC work to capture larger market shares.
Nvidia reported first-quarter revenue of $44.1 billion for the period ending April 27, 2025, marking a 69% increase from the previous year and a 12% rise from the previous quarter. The company's data center segment, which includes its AI processors, saw even more impressive growth with a 73% year-over-year increase to $39.1 billion. Gaming revenue also showed strong performance, rising 42% to $3.8 billion.
However, Nvidia faces challenges on the regulatory front. In April 2025, the U.S. government imposed new export licensing requirements for Nvidia's H20 products destined for the Chinese market. As a result, the company incurred a $4.5 billion charge related to excess inventory and purchase obligations, and expects to lose approximately $8 billion in second-quarter revenue. CEO Jensen Huang noted that the $50 billion market in China for AI chips is "effectively closed to U.S. industry."
Meanwhile, AMD is aggressively pursuing market share in the AI chip sector. CEO Lisa Su recently announced that AMD's latest MI350 series chips can outperform Nvidia's offerings in certain scenarios, delivering up to 40% more tokens per dollar compared to Nvidia's B200 accelerators. While AMD's data center revenue of $3.9 billion in Q4 2024 still trails far behind Nvidia's, the company achieved a 122% year-over-year growth rate in this segment, slightly outpacing Nvidia's 112% growth.
TSMC, the world's largest contract chipmaker and a key supplier to both Nvidia and AMD, is also benefiting from the AI boom. The Taiwan-based company reported a 60% year-over-year increase in profit for Q1 2025, reaching $11.1 billion. TSMC's planned U.S. investment has now reached $165 billion, highlighting the strategic importance of semiconductor manufacturing in the AI era.
Analysts project the overall AI chip market to exceed $500 billion by 2028, up from previous estimates. While Nvidia currently controls approximately 75-80% of the AI GPU market, AMD is expected to increase its share from around 15% today as the market continues to expand, particularly in AI inference applications where AMD's cost-effective solutions may have advantages.