Morgan Stanley Identifies 6 Global Stocks Poised to Benefit from Monumental Shift in Chip Industry
Analysts at Morgan Stanley have identified a "monumental shift" underway in the semiconductor industry that is expected to benefit a range of stocks. The transition to "3D 'gate-all-around' architecture (GAA)" presents a significant opportunity for original equipment manufacturers in the semiconductor capital equipment sector. This transition marks a fundamental change in leading-edge logic chip architectures, introducing an improved 3D structure for next-generation AI chips. While initial gains may be subdued, Morgan Stanley is optimistic about the long-term potential, viewing it as a roadmap for the next decade.
Stock Picks: Companies Set to Benefit
Morgan Stanley has identified several stocks that are expected to benefit from this monumental shift. Lam Research, a U.S. supplier of wafer-fabrication equipment, is rated overweight by the bank. The company is anticipated to see benefits from the transition to GAA ramping through FY24. VAT Group, a Swiss company specializing in vacuum valves and related services, is also rated overweight due to its exposure as a subcomponent supplier to major players in the industry. Dutch company ASML Holding, which enables chipmakers to produce patterns on silicon with lithography, received an overweight rating as well. Morgan Stanley analysts agree that the gate-all-around architecture is beneficial for ASML. Additionally, the bank favors Intel, Samsung, and TSMC, as all three have announced their intention to move towards GAA in the near term.
Industry Outlook and Future Prospects
Morgan Stanley notes that TSMC and Intel are laying the groundwork for gate-all-around architecture, with pilot lines expected to be established in the second half of 2024. Samsung, on the other hand, is already producing its first-generation chips. The analysts anticipate the main push for this technology will likely occur in 2025. While it is too early to predict the final outcome, the potential for reinvigorated competition is seen as a positive driver for advanced logic wafer fab equipment spending. The positioning of companies will depend on the progress made in FY24, where production will still largely be in the trial (pilot) phase.
In conclusion, Morgan Stanley's analysis highlights the significant opportunities presented by the monumental shift towards 3D gate-all-around architecture in the chip industry. The identified stocks, including Lam Research, VAT Group, ASML Holding, Intel, Samsung, and TSMC, are poised to benefit from this transformative change. As the industry progresses towards adopting this new architecture, it is expected to bring about fundamental improvements in chip performance and electrical efficiency, creating a promising roadmap for the future.
Implications of Chip Industry Shift on New Business Formation
The "monumental shift" in the semiconductor industry, as identified by analysts at Morgan Stanley, could have significant implications for new business formations. The transition to "3D 'gate-all-around' architecture (GAA)" presents a substantial opportunity for original equipment manufacturers in the semiconductor capital equipment sector, potentially paving the way for next-generation AI chips.
Beneficiaries of the Shift
Morgan Stanley has pinpointed several stocks expected to benefit from this shift, including Lam Research, VAT Group, and ASML Holding. These companies' involvement in various aspects of semiconductor production positions them to capitalize on the transition to GAA. Similarly, tech giants Intel, Samsung, and TSMC, with plans to adopt GAA, could also see significant benefits.
Opportunities for New Businesses
The shift towards GAA architecture could open doors for new businesses in the semiconductor industry. As companies like TSMC and Intel lay the groundwork for GAA, and Samsung begins producing its first-generation chips, there may be opportunities for startups and new businesses to provide innovative solutions and services.
Future Prospects and Industry Outlook
While the main push for GAA technology is anticipated in 2025, the trial phase in FY24 could provide insights into the positioning of companies in this new landscape. The potential for reinvigorated competition could drive advanced logic wafer fab equipment spending, creating a conducive environment for new business formations.
In summary, the shift towards 3D gate-all-around architecture in the chip industry presents significant opportunities for both existing companies and new business formations. As the industry evolves, the landscape for startups and new businesses in the semiconductor sector could be fundamentally transformed.
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