This analysis is by Bloomberg Intelligence Regional Market Analyst John Lee and Bloomberg Intelligence Senior Industry Analyst Masahiro Wakasugi. It appeared first on the Bloomberg Terminal.
Generative AI could emerge as a $1.3 trillion market by 2032, growing at a 42% compound annual rate, according to BI analyst Mandeep Singh. Nvidia, Microsoft, Alphabet, Amazon and other US companies are lining up for a piece of the AI market, yet a group of Asian hardware companies — both large cap and small cap — also have stakes in this technology.
ChatGPT could boost DRAM demand, boosting SK Hynix’s sales
AI’s widespread adoption could drive strong demand for memory chips. Deep-learning applications require vast amounts of memory to store complex computations, and faster memory speeds are required for computing efficiency. Of the major DRAM makers, SK Hynix has the highest exposure to server DRAM as a percentage of total DRAM shipments, at 45%. SK Hynix has already announced it will ship the sector’s first high-bandwidth memory to Nvidia, according to BI analyst Masahiro Wakasugi.
Chip testers could gain prominence under ChatGPT
Generative AI could boost demand for semiconductor testing devices from US-based Teradyne and Japan-based Advantest. The speed of chip performance required for AI learning will likely outpace the speed of chipmakers’ tech evolution. The importance of testers, which measure chip performance and promote quality assurance, could rise, according to BI analyst Masahiro Wakasugi.
ODM-direct servers ride on AI frenzy
AI’s rapid emergence should boost server-market demand and original design manufacturers’ (ODM) direct servers, which make custom models for cloud service providers such Microsoft, Google and Amazon, and are ideally positioned, according to BI analyst Steven Tseng. Taiwanese ODM-direct server maker Wiwynn’s AI servers accounted for 20% of its 2022 server shipments, but management expects that to soar to 50% over the next few years. Shares of Winstron Corp, Wiwynn’s parent, rallied the most among Asian hardware makers after Nvidia announced its first-quarter earnings.
Shibaura mechatronics can expand chip tool sales on ChatGPT
Growing demand for Nvidia’s GPUs and TSMC’s advanced chip packaging could also drive sales of chipmaking tools. Japan-based Shibaura Mechatronics, which supplies chipmaking tools to foundries such as TSMC, is well-positioned, according to BI analyst Masahiro Wakasugi. Shibaura commands top global market share in an array of niche tools, such as flip chip bonders and etching systems.
AI doesn’t move TSMC’s revenue needle yet
TSMC’s dominance in leading-edge node semiconductor manufacturing positions it to dominate AI chip production from key customers such as Nvidia and AMD. AI infrastructure investment and chip demand will also help TSMC overcome headwinds in other segments, including PCs and smartphones. Yet, server GPUs accounted for just 12% of the global computing processor market last year. BI analyst Charles Shum believes TSMC may have to wait until 2025 for AI chips to meaningfully move the revenue needle.
Bloomberg
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