In 2023, startups globally experienced a depressing restructuring period, marked by the downfall of numerous unicorns. Now, as we move into 2024, investors and entrepreneurs within the startup community are shifting their focus to artificial intelligence (AI), recognizing it as the most exciting and promising technology.

The startup landscape last year could be likened to a “pandemic” of sorts, devastating numerous unicorns. According to the available data, the total funding of startups that ceased operations in 2023 surpassed USD 41 billion, a sum equivalent to the combined total of startup funding from 2019 to 2022. Noteworthy and high-valued startups that closed down in 2023 include Olive, a medical insurance startup valued at USD 4 billion; Convoy, a smart truck fleet developer valued at USD 3.8 billion; and Zume, a textile company focused on reducing plastic waste, valued at USD 2.3 billion.

Additionally, over 20 unicorns, including Notion, AirTable, and Grammarly that are well-known in Taiwan, have not launched a new fundraising round for two consecutive years. Amid this downturn, AI, particularly generative AI technologies and enterprises, has emerged as the brightest beacon in the gloomy global startup environment.

According to CB Insights, since the second quarter of 2023, startups incorporating AI-related technologies have seen at least a 20% increase in funding. For more advanced startups that have progressed to Series B funding and beyond, those focusing on AI have received a remarkable 59% increase in investment. A report from Startup Genome highlights that AI and big data were the most sought-after sectors by investors in 2023, comprising 28% of the total global startup investment for that year. Interestingly, at the 2023 Consumer Electronics Show in the United States, the largest share of participants from Taiwan (28%) was involved in AI and robotics. Furthermore, digital healthcare and smart cities/environmental sustainability, fields closely intertwined with AI, accounted for 20% and 18%, respectively, of the Taiwan-based participants.

The recent developments underscore a clear trend: AI has become a core technology across industries. Microsoft has not just invested a substantial USD 10 billion in OpenAI but is also comprehensively integrating AI into its products, workforce, and data management strategies to establish an early lead in this domain. Amazon and Google are closely following suit, each launching a series of AI application services. What has particularly stunned the industry is Apple’s recent decision to discontinue its electric vehicle project, which was a decade in the making. Instead, Apple is shifting its strategic focus, reallocating resources to accelerate the development of generative AI projects.

In summary, AI is undeniably the most significant trend within the startup ecosystem in 2024. While tech giants utilize their extensive resources to advance AI technologies, startups are concentrating on practical applications of AI in various fields. According to TrendForce analysts, three areas particularly warrant attention in 2024: cybersecurity, smart healthcare, and retail services.

Rapid Advances in AI Represent a Double-Edged Sword for Cybersecurity

On the frontline of cybersecurity, AI has emerged as a formidable tool for both attack and defense. Hackers use AI to simplify their attacks, whereas cybersecurity professionals use AI to identify vulnerabilities. Nevertheless, the reality of the cybersecurity sector is complex. The unpredictability of attacks, combined with the often passive approach of many companies towards data protection, means that the primary advantage of AI lies in its ability to mitigate rather than prevent incidents. TrendForce analyst P. K. Tseng notes that IT staff can employ AI tools to swiftly analyze attack vectors following a cybersecurity incident, thereby enabling them to promptly patch vulnerabilities and lower the risk of subsequent attacks.

Furthermore, owing to the shortage of cybersecurity talent, many IT personnel are also tasked with cybersecurity responsibilities. With the advent of generative AI, leading tech firms like Cisco and Palo Alto Network have started leveraging these technologies to streamline operations. As a result, IT staff in these companies can now execute previously complex and unfamiliar cybersecurity tasks through conversations in natural language.

Despite these advancements, deploying comprehensive and effective cybersecurity measures remains a costly endeavor for many small and medium-sized enterprises and end-users, often with benefits that are not immediately apparent.

To bolster data protection efforts, numerous manufacturers are now focusing on enhancing security measures at the upstream of their supply chains. For instance, Taiwan’s crucial semiconductor industry has seen the emergence of innovative startups like Jmem Tek. This company has revolutionized chip programming by incorporating fuse and anti-fuse technologies to transition from traditional single-bit to multi-bit methods. The innovative approach scrambles bit arrangements, thwarting hackers’ attempts at reverse engineering. Solutions like ones offered by Jmem Tek find applications in various fields, including IoT, automotive electronics, and electronic hardware protection.

Leading chip manufacturers such as Infineon, ARM, and NXP are increasingly adopting hardware protection strategies at the upstream, significantly contributing to the rapid growth of the cybersecurity market.

As cyber-attacks and data breaches become increasingly common, cybersecurity startups are facing significant growth opportunities.

Global Information estimates that the IoT security market alone will reach USD 6.6 billion by 2024, with projections suggesting it could grow to USD 28.01 billion by 2029, at a CAGR of 33.53% between the two years.

IDC predicts that by 2026, 30% of large enterprises worldwide will improve the efficiency their cybersecurity incident remediation, management, and response by investing in autonomous security solutions. Analysts, however, warn that cybersecurity is a highly sensitive area. Typically, businesses prefer to work with established cybersecurity firms rather than startups, and this poses a considerable entry barrier for new players. Hence, this scenario represents both a potential risk and an opportunity in the market.

As Foreign Healthcare Giants Pioneers the Use of AI in Precision Medicine, Taiwan-based Startups Follow Closely

Healthcare and pharmaceuticals rank among the industries with the highest investment in smart technology, particularly in drug research and development. Over the last decade, two-thirds of the drugs approved by the U.S. Food and Drug Administration have been small-molecule drugs. The development of these drugs has increasingly relied on AI technologies. Leading companies in this space include Recursion, Benevolent, and notably, Insilico Medicine.

In 2023, ISM5411, the world’s first cancer drug developed entirely through AI, advanced to Phase II clinical trials. This breakthrough serves as a remarkable milestone, showcasing the remarkable speed at which AI can innovate and produce new, lifesaving medications.

While the aforementioned drug startups may not be widely recognized, their influence within the pharmaceutical industry is profound. Insilico Medicine’s principal investor is Janssen Pharmaceuticals, a subsidiary of Johnson & Johnson. Recursion’s principal investor is Leaps by Bayer, a subsidiary of Bayer.

Moreover, Roche Pharmaceuticals has partnered with several AI drug startups to accurately identify potential participants for drug trials, thus speeding up the development process.

“Smart healthcare,” seemingly lifted from a sci-fi movie, is gradually becoming a reality, thanks in part to AI. This is particularly evident with the development of the brain-computer interface technology, which involves implanting minuscule processors in the brains of patients with limb paralysis. This enables them to control digital devices, such as smartphones and computer mice, using their thoughts. Currently, two startups have initiated human trials for this technology: Neuralink led by Elon Musk and Synchron, the latter of which has received investments from Jeff Bezos and Bill Gates.

TrendForce forecasts that the global smart healthcare market is expected to surpass USD 360 billion by 2025. In Taiwan, the revenue from digital healthcare products and services reached TWD 50 billion in 2022. With advancements in AI, Taiwan-based startups related to smart healthcare have come under the spotlight, with 14% of local entrepreneurs venturing into this field.

Tailored for Individual Consumers: Smart Retail Unleashes Huge Business Opportunities

AI has long been anticipated to revolutionize the retail industry, yet its adoption has encountered setbacks, particularly with growing concerns over privacy. Furthermore, the once highly popular unmanned stores have seen their growth stall due to a range of factors. However, the emergence of generative AI holds the potential to usher in significant new changes.

“Retail technology is advancing towards greater customization, akin to a personal shopping consultant for each consumer,” stated TrendForce analyst Tseng. For example, the latest shopping service introduced by global retail giant Walmart leverages generative AI. Customers only need to make a general request, and Walmart’s AI system generates a comprehensive shopping list, giving them the freedom to choose which items to buy.

Today, when people shop online, they are accustomed to searching for the desired products, but this process still takes a lot of time, and it is easy to get distracted and browse for other items. However, with an AI-powered virtual shopping assistant, if someone wants to organize a barbecue for his family, the assistant will compile all the necessary items automatically.

Walmart’s AI shopping service is provided by Microsoft, with the underlying technology coming from OpenAI. Meanwhile, Google is set to integrate generative AI into its business-to-business (B2B) services. The e-commerce behemoth Amazon has also started testing a shopping assistant named Rufus AI, positioning itself to once again transform the retail landscape.

Beyond major corporations, Taiwan is fostering startups that use AI to expand smart retail across diverse markets. Carmi Technology, a local startup, targets health supplements, which are in high demand in the domestic market. The company introduced a one-stop customization service, enabling customers to tailor health supplements to their specific needs and avoid the clutter of numerous bottles and jars. This innovative approach positions Carmi Technology to capture more opportunities in this niche market.

AI Is Everywhere

Besides the rapid progress of startups in integrating AI in the aforementioned sectors, the presence of AI is ubiquitous in the startup scene of Taiwan and worldwide.

While this trend is very apparent this year, AI should not be regarded as the ultimate solution for everything. Taking the highly popular ChatGPT as an example, many users have started to notice a decline in the quality of responses. This issue could be due partly to users’ increased expectations, but it could also have to do with limited computational resources. In order to shorten response time and save on computing power, chatbot platforms might reduce the number of parameters in their machine learning systems.

The final and most important point is that regardless of the application markets where AI is adopted, the possibility of errors must be taken into consideration. Therefore, core decision-making ultimately needs to be handled by humans in order to prevent irreversible harm.

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(Photo credit: Micron)

Apple’s Vision Pro, which went on sale in the United States in February this year, is reportedly gearing up for sales outside the US to test the waters! China, Japan, South Korea, Germany, and France are among the nations expected to join this wave of availability.

According to reports from the CTEE and Bloomberg, Apple has flown retail employees from various countries to its headquarter in Cupertino, California for training. The training program, started last week, lasted four days and focused on teaching staff how to demonstrate Vision Pros to customers. Participants in the training came from Germany, France, Australia, Japan, South Korea, Singapore, and China.

Though Apple has not disclosed the actual debut date or the countries where the Vision Pro will be launched outside the US, in March, a report by MacRumors suggested that code within VisionOS might hint the potential sequence of international sales for the Vision Pro.

Apple has added 12 new languages to the Vision Pro’s virtual keyboard and auto-correction features, including English versions for five regions (Australia, Canada, Japan, Singapore, and the UK), French for two regions (France and Canada), German (Germany), as well as Japanese, Korean, Traditional Cantonese, and Simplified Chinese, which indicates that nine countries, including China, Japan, and Korea, may be among the first markets Vision Pro could potentially make its debut.

According to a January estimate by TrendForce, if initial sales are strong, Vision Pro shipments could reach between 500–600 thousand units in 2024. 

Apple’s Vision Pro features a Micro OLED display, currently exclusively supplied through a process that uses TSMC’s CMOS backplanes in combination with Sony’s deposition process.

(Photo credit: Apple)

As generative AI models like OpenAI sweep across the globe, the demand for high-performance GPU has been on the rise. For instance, NVIDIA’s GPU products are in tight supply and often reportedly out of stock. Industry analysis reveals that NVIDIA’s high-performance GPU is manufactured by TSMC and packaged using CoWoS technology. However, TSMC’s advanced CoWoS packaging capacity is insufficient to meet the AI demands. Later, TSMC actively expanded CoWoS production, and NVIDIA’s GPU shipments gradually stabilized as capacity increased.

Notably, new challenges present following the ease of GPU shortage problem.

Recently, Mark Zuckerberg, CEO of Meta, stated publicly that the GPU shortage in AI data centers is being alleviated, while the future bottleneck will be power supply.

As GPU supply become less tight, companies kick-start big investment in building data centers and other infrastructure facilities to be in tune with the AI development trends.

Zuckerberg believes that the next crux for AI development will be power supply. He noted that many new data centers could consume 50-100MW, and large data centers could reach up to 150MW. As the scale of data center power consumption continues to grow, AI industry may hit a power supply bottleneck.

The energy industry, unlike the AI sector, does not find building new power plants a simple task. Given factors such as regulations (Especially nuclear energy), power transmission planning, and construction, it could take several years from planning to the actual integration of new power into the grid. Therefore, capital investments fail to yield results in a short time, and the delivery of additional power supply lags far behind the construction of data centers.

To address the potential future power crisis, media reports indicate that Meta is currently collaborating with Silicon Ranch, a solar energy company in Georgia, to supply power to its data centers.

Likewise, Tesla CEO Elon Musk also issued a warning regarding AI development in April 2024, stating that the next shortage facing AI will be power, and there may not be enough electricity to run all the chips next year.

Besides, OpenAI CEO Sam Altman has also stated that AI will consume more power than expectation, and future AI development will require breakthroughs in clean energy.

Thanks to the surge in AI demand, Samsung and SK Hynix, the world’s leading memory chip manufacturers, anticipate the prices of DRAM and high-bandwidth memory (HBM) to remain strong this year due to increasing demand for high-performance chips. According to the Korea Economic Daily, Samsung and SK Hynix have converted over 20% of their DRAM production lines to produce HBM.

Last week, SK Hynix CEO Kwak Noh-jung announced at a press conference that their HBM chips have already been sold out for 2024 and are nearly sold out for 2025.

During an investor relations meeting hosted by Samsung Securities on May 9th and 10^th, a SK Hynix official stated that the company’s HBM chips are supplied through binding annual contracts, which detail supply volumes, payment methods, and deadlines.

The price drop in HBM3 will be offset by the price increase in HBM3e, so the gross profit margin is expected to remain stable in 2024, according to the Korea Economic Daily, citing the SK Hynix official. It is also reported that NVIDIA is the major customer of SK Hynix’s eight-layer HBM3e.

According to the report, a Samsung IR executive also stated that the company’s HBM production has been sold out. Based on the current supply and demand situation, Samsung has predicted that HBM will not be in oversupply in 2025.

Samsung noted that the gap between its eight-layer stacked HBM3e and SK Hynix’s is closing, claiming it has taken the lead with 12-layer HBM3e.

In late March, South Korean media Alphabiz reported that Samsung may exclusively supply 12-layer HBM3e to NVIDIA, indicating NVIDIA is set to commence large-scale purchases of Samsung’s 12-layer HBM3e as early as September.

In terms of the price outlook for traditional DRAM and solid-state drives (SSDs), both SK Hynix and Samsung remain positive.

According to the latest forecast by Trendforce, the HBM market is poised for robust growth, driven by significant pricing premiums and increased capacity needs for AI chips. HBM prices are expected to Increase by 5–10% in 2025.

In terms of market value, HBM is projected to account for more than 20% of the total DRAM market value starting in 2024, potentially exceeding 30% by 2025.

(Photo credit: SK Hynix)

Samsung’s planned launch of its budget model version for the upcoming Galaxy Z Fold 6 foldable phone may be cancelled, according to information obtained by South Korea’s media outlet TheElec.

According to sources cited by TheElec, component suppliers to Samsung, which were gearing up for mass production of parts for these foldable devices, indicated that they have not received orders for the budget model Fold 6.

Initially, the South Korean tech giant had planned to unveil three foldable phones this summer: the Galaxy Z Fold 6, the Galaxy Z Flip 6, and an affordable version of the Fold 6.

The Fold 6 features a digitizer layer on the screen to support the S-Pen stylus, but the budget model was intended to be thinner and omit this feature.

It is reported that Samsung, after conducting a durability test of 200,000 folds for the budget model, with water and dust resistance functions added, has founded out that the product turned out not to be thinner than its Chinese rival Huawei’s equivalent, thus lacking significant differentiating points from these rival products.

Huawei’s Mate X3 and X5, launched last year, were both around 11.08mm thick, according to information obtained on Huawei’s website. Samsung’s Galaxy Z Fold 5 was 13.4mm thick, while Xiaomi’s Mix Fold 3 was 10.9mm thick.

According to analysis from TrendForce, global shipments of foldable phones reached 15.9 million units in 2023, marking a 25% YoY increase and accounting for approximately 1.4% of the overall smartphone market. In 2024, shipments are expected to rise to about 17.7 million units, growing by 11% and slightly increasing the market share to 1.5%. However, this growth rate remains below market expectations, with the segment’s share predicted to exceed 2% only by 2025.

Trendforce points out that the slowdown in the growth of foldable phones could be attributed to two main factors: Firstly, consumer retention is low due to frequent maintenance issues faced by first-time foldable phone users, leading to a lack of confidence in the product. As a result, users may opt for high-end flagship smartphones when considering replacements. Secondly, the current price points of foldable phones have yet to reach the sweet spot for consumers, making it challenging to meet sales targets based solely on pricing.

(Photo credit: Samsung)