In 2023, artificial intelligence (AI) is the topic that concerns investors the most.

The rise of generative AI, represented by ChatGPT, has led to an upgrade iteration in a number of Technology Industries, such as the chip industry representing computing power and the cloud computing industry, as well as the software industry representing applications.

As we enter 2024, does AI still have opportunities? This is a question many investors have in mind.

From the CES conference at the beginning of the year, the market seems to have observed some new trends, with the term "AI PC" appearing frequently, becoming a field actively布局 by various manufacturers.

What exactly is an AI PC? What is the current market situation and future development of AI PCs? Will AI PCs stimulate a super replacement cycle? Which manufacturers are making plans?

This article will take you on a journey to explore it.

What is an AI PC?

Since AI PC is an emerging term, the industry does not have a clear definition for it yet, but in essence, an AI PC is a Computer capable of running AI models locally, which requires the computer chip module to have sufficient computing power.

Generally speaking, personal computers are equipped with two types of processors: CPU and GPU. In fact, computers configured with high-end CPUs and GPUs can already run cloud-based AI services.

However, according to the definition provided by Canalys, truly meaningful artificial intelligence applications on computers must prioritize factors such as real-time response, low latency, and security. Therefore, an AI PC must be equipped with chipsets or modules specifically designed to accelerate AI computing tasks.

For example, Intel has designed chip modules for AI PCs that are equipped with a neural processing unit (NPU) in addition to conventional CPUs and GPUs, to enhance AI computing efficiency and reduce energy consumption.

Therefore, it can be understood that an AI PC refers to a personal computer that is equipped with chipsets or modules specifically designed for AI acceleration and can run AI service functions locally.

Will AI PCs spark a super replacement cycle for PCs?

Why is the market so optimistic about AI PCs? This is because the current PC market is relatively sluggish, and AI may accelerate technological updates in the PC Industry.

The overall PC market is currently sluggish.

The whole PC market has already matured significantly; without revolutionary technological innovations, the annual PC shipment volume remains relatively stable. According to IDC data, global PC shipments have remained around 0.26 billion units from 2017 to 2019.

However, starting in 2020, people gradually developed the habit of remote work, leading to an increase in PC shipments to 0.302 billion units, a year-on-year growth of 13.1%; by 2021, it reached 0.348 billion units, with a year-on-year growth of 14.8%.

But as the pandemic gradually receded, the reduction of global home scenarios starting in 2022 led to weak demand, and PC market shipments began to decline to 0.292 billion units.

In 2023, due to inventory accumulation, PC manufacturers began to engage in a price war, but consumer demand did not rebound, and the PC market remained sluggish, with annual PC shipments at 0.259 billion units, a year-on-year decline of 13.8%.

Against this backdrop, the entire PC Industry is looking for a second wave of growth curve, and the epoch-making 'AI' naturally becomes the 'savior' they hope for. Therefore, the large number of AI PC launches is not surprising.

Source: IDC. Shipments are in millions of units.

Will 2024 become the year of AI PCs?

It can be anticipated that with the gradual launch of AI PC products, there may be a wave of replacements in the PC market.

Qualcomm's Vice President and General Manager of Computing and Graphics Kedar Kondap believes that AI will drive the PC market into a super replacement cycle, which will begin in 2024.

Additionally, IDC believes that the demand for users to migrate to Windows 11 is also one of the factors accelerating the replacement of devices.

Driven by these two factors, IDC predicts that global PC shipments will return to growth in 2024, with a growth rate of 3.4%.

From another research institution, Canalys, the same conclusion can be drawn; they believe that 2024 will be the initial stage of AI PC expansion, AI PCs will become mainstream products in the market by 2025, sales of AI PCs will account for more than half of total PC sales by 2026, and reach a shipment share of 60% by 2027.

Which manufacturers are laying out plans for AI PCs?

Facing the historic opportunities of AI, major manufacturers are vying to lay out plans. From the Industry Chain perspective, it can be divided into chip manufacturers and end computer manufacturers. Here is a collection of some public data to help everyone see which companies are laying out plans.

First, let's take a look at the layout of chip companies:

Intel (INTC)

As one of the oldest computer chip manufacturers, Intel is also one of the first chip manufacturers to begin laying out plans for AI PCs.

In September of last year, at an event held in Silicon Valley, Intel CEO Pat Gelsinger introduced the revolutionary concept of "AI PC."

In mid-December 2023, Intel officially released the new Core Ultra processors configured for AI PCs, which the company claims is the biggest architectural change in 40 years.

Unlike previous conventional upgrades, the Intel Core Ultra is equipped with the newly launched AI accelerator - the Neural Processing Unit (NPU), achieving a new level of efficient AI acceleration, improving energy efficiency by 2.5 times compared to the previous generation.

Intel stated that in 2024, more than 230 models will be equipped with this processor, marking the beginning of a new AI era.

Qualcomm (QCOM)

Qualcomm has always been one of the dominant players in mobile chips and has actively planned for AI PCs last year.

In October 2023, at the Snapdragon Summit held in Hawaii, the company released the Snapdragon X Elite platform designed specifically for PCs.

The uniqueness of this chip lies in its use of the Oryon architecture for its CPU, with Qualcomm claiming that its chip is faster than Apple's M2 Max chip in certain tasks, and more energy-efficient than both Apple and Intel.

Additionally, regarding artificial intelligence, Qualcomm's Senior Vice President Alex Katouzian stated that the biggest new feature is that the chip can handle artificial intelligence models with 13 billion parameters, which serves as a proxy measure of the complexity of AI systems that generate text or images.

PCs equipped with Snapdragon X Elite are expected to hit the market by mid-2024.

Advanced Micro Devices (AMD)

As the second dominant player in the PC CPU field, AMD has also taken action.

In December 2023, AMD announced its latest progress in the AI PC field, launching the next generation Ryzen 8040 series processors. This processor features the Ryzen AI NPU module, with AI performance 1.6 times higher than previous models.

AMD stated that the Ryzen 8040 series processors have started shipping. New machines equipped with the Ryzen 8040 series from major OEMs like Acer, ASUS, Dell, HP Inc, Lenovo, and Razer are expected to hit the market starting in the first quarter of 2024.

NVIDIA (Nvidia, NVDA)

Before the explosion of generative AI, NVIDIA's largest market had been the PC segment for "gaming."

However, after the AI explosion in 2023, NVIDIA focused almost entirely on its data center business for the entire year, leading to relative silence in the PC business, to the point where the market almost forgot NVIDIA's significant position in the PC graphics card market.

However, at the CES conference in early 2024, NVIDIA finally made a big splash, releasing a large number of new AI applications and GPU products for the PC segment, including the GeForce RTX 40 SUPER series graphics cards, NVIDIA AI Workbench, the open-source library TensorRT-LLM, and NVIDIA ACE microservices with generative AI-driven speech and animation models.

It is claimed that the GeForce RTX 40 SUPER series graphics cards will be featured in products from manufacturers like Acer, ASUS, Dell, HP Inc, Lenovo, MSI, Razer, and Samsung, and sales are planned to begin in January 2024.

From the perspective of terminal computer manufacturers, many computer companies have begun to layout AI PCs. According to data from Canalys, the top three global PC shipments in 2023 were Lenovo, HP Inc, and Dell. Now, let's take a look at how these three companies are positioning themselves in the AI PC field.

Lenovo (Lenovo, LNVGY)

Lenovo is one of the earliest manufacturers to layout AI PCs.

By mid-December 2023, Lenovo had already launched three brand new AI PCs, which are the Lenovo ThinkPad X1 Carbon, ThinkPad X1 2-in-1, and IdeaPad Pro 5i, all equipped with the latest Intel Core Ultra processors and Windows 11 operating system.

HP Inc (HP Inc, HPQ)

Although HP Inc has also made some arrangements, the launch of its new products will be a bit later. The company plans to release its first AI PC in the second half of 2024.

Although HP Inc believes that the AI PC will drive market growth, they think it will take some time for customers to adopt Computers with artificial intelligence acceleration features.

Dell Technologies (DELL)

While Dell is known for producing personal laptops and computer monitors, the company also manufactures Server racks and other enterprise hardware.

Reports suggest that last August, Dell announced plans to invest in the AI field, with a focus more on learning from Amazon's practices, namely developing AI Servers and infrastructure.

However, in reality, Dell has also made arrangements in the AI PC field. On January 4, 2024, Dell launched three brand-new AI PC products: XPS 13, XPS 14, and XPS 15. All three new models are equipped with Intel's Intel Core Ultra processors.

Potential risks of AI PC

Of course, AI PCs also have some potential risks. Currently, although some manufacturers have launched related products, there is still a question of whether users really have the need to change their machines. Two main aspects need to be considered:

1. Is the price appropriate: Due to the limited availability of AI PC products, the specific pricing situation is still unclear. If the cost of switching devices is too high, users who prioritize price may choose not to upgrade.

2. In terms of practicality: For ordinary consumers, the cloud-based AI applications currently in use are already meeting their usage needs and entertainment experiences. Whether it is really necessary to deploy AI computing power on the local computer remains a question.

Recalling the past when 5G smartphones were promoted for replacement, at that time 5G smartphones were much more expensive than 4G. Major media outlets promoted the advantages of 5G, but some users found after the experience that it wasn't that special, making it generally difficult to convince consumers to pay a premium for 5G. Only when the prices are comparable to previous generations will people choose to buy 5G smartphones for upgrades.

Is AI PC merely a marketing gimmick like 5G, or can it truly disrupt the PC industry like the Smart Phone did over a decade ago and breathe new life into it? This question is worth pondering.

In summary

1. AI PC is a computer that can run AI models locally, requiring high-performance chip modules, but there is no clear definition in the industry yet.

2. AI PC can drive the PC market into a super replacement cycle, with the launch of AI PC products expected to trigger a wave of upgrades starting in 2024.

3. Major manufacturers are racing to layout AI PC, including Intel, Qualcomm, AMD, and NVIDIA in chip-level arrangements, as well as terminal computer manufacturers like Lenovo, HP Inc, and Dell.

4. The potential risks of AI PCs are high prices and lack of practicality, similar to the situation with 5G Smart Phones.