November 30, 2023
Stocks will benefit from huge changes in the chip market

A “significant shift” is underway in the semiconductor industry, according to analysts at Morgan Stanley – and many stocks are set to benefit. In a September 18 note, he highlighted the shift to “3D ‘get-all-around’ architecture (GAA)”, which he said could generate over $10 billion for semi-cap original equipment manufacturers by 2030. Presents “cumulative” opportunities. “The transition to 3D ‘get-all-around’ architecture marks a significant change for leading-edge logic chip architectures,” the analysts said. The change, he said, “introduces a significantly improved 3D structure on which next generation (AI) chips will be built,” and will bring about a “fundamental change” when it comes to performance and power efficiency. Although industry players expect initial gains to be “relatively small”, Morgan Stanley is optimistic that the change will set a “roadmap for the next decade”. Stock Picks Here are some stocks that Morgan Stanley expects to benefit from: Lam Research is one of the stocks the bank has given an Overweight rating. The company, a US supplier of wafer-fabrication equipment, “expects to see benefits from the GAA ramping up move by fiscal 2014,” analysts said. Swiss company VAT Group was also rated overweight for vacuum valves and related services. Morgan Stanley included the stock even though it is not an equipment seller “due to its performance as a subcomponent supplier of LAM. [Group]Applied Materials and ASM ([which have] Dutch company ASML Holding, which enables chipmakers to create patterns on silicon with lithography, also received an overweight rating. Analysts at Morgan Stanley agreed with the company’s statement that “The industry is good for getting-all-around, [so] Good for ASML.” The bank also likes Intel, Samsung and TSMC, which it said “have all announced their intention to move toward GAA in the near term.” Morgan Stanley said TSMC And Intel is “laying the groundwork” for a get-all-around architecture, with pilot lines expected to be established in the second half of 2024, while Samsung is already producing its first generation of chips, it said. The “main push,” will likely occur in 2025. “Although it is too early to call the final outcome, the potential for revived competition should be a tailwind for advanced logics.” [wafer fab equipment] spend. Positioning will depend on progress in FY24, where production will still largely be in the testing (pilot) phase, the analysts wrote. — CNBC’s Michael Bloom contributed to this report.


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