After in-depth research on the Taiwanese semiconductor supply chain, Morgan Stanley summarized seven conclusions

With the continuous growth in global demand for high-performance computing, artificial intelligence, and data centers, the semiconductor industry is developing rapidly. Taiwan, with its advanced technology and massive manufacturing capacity, has become an indispensable link.

On the 25th, Morgan Stanley released its latest research report, conducting in-depth research on the Taiwanese semiconductor supply chain, analyzing the latest market dynamics and future trends in detail, and summarizing seven key conclusions to provide investors and the market with new insights and analysis.

1. NVIDIA's Fundamental Outlook Remains Optimistic

Morgan Stanley's research indicates that NVIDIA's demand outlook remains strong, with remarkable demand for H100 and increasing visibility for H200 growth. Although H100 delivery times are short, this is a natural phenomenon during product transitions, and visibility is expected to improve over the next 3-4 quarters. While the market's expectations for NVIDIA are partially reflected in the stock price, its outlook is still positive.

2. Limited Upside for AMD's AI Business

Despite the strong performance of AMD's MI300 in the market, the company's guidance target is $4 billion. However, with the increasing supply chain, the company needs to prepare for higher targets. While the CoWoS supply chain has not slowed down, there are some growth pain points in terms of demand, with delays in demand from some customers. Overall, AMD is expected to achieve its full-year guidance target, but faces significant competition pressure from NVIDIA.

3. Continued Progress in High Bandwidth Memory (HBM) Supply Chain

The supply situation for HBM3 has improved, but HBM3e remains a key bottleneck. Initially, SK Hynix will be the main supplier of NVIDIA's Blackwell GPU, while Micron Technology is driving growth for H200. Mainland China is also developing HBM2 capacity, which may further enhance the future.

4. Apart from High Bandwidth Memory, the Memory Market Remains Soft but Well-Priced

The supply and demand status of memory is uneven, with most incremental supply allocated to HBM, but overall demand remains soft. However, pricing sentiment is relatively optimistic, with enterprise-level NAND prices expected to rise by over 20% in the third quarter, and consumer NAND prices to increase slightly.

5. Mixed Reactions to Windows on Arm

Qualcomm's Nuvia product as the first focus of Windows on Arm has had mixed performance. While the performance metrics are impressive, there are still issues with application compatibility and system costs. Market participants need to continue to drive retail and OEM incentives to reach the critical threshold of application developer support.

6. Some Interesting Impacts in the AI Supply Chain

Morgan Stanley believes Broadcom has the opportunity to gain a larger share in the optical PAM4 business. In addition, the increased demand for testing intensity for NVIDIA's Blackwell may indicate an increase in testing intensity for future ASICs.

7. Overall Market Performance is Lackluster, Concerns in the Silicon Carbide (SiC) Field

Market performance in industries other than AI is weak, with poor recovery in industrial, automotive, and FPGA sectors. Morgan Stanley is cautious about the prospects of SiC, believing that the supply chain in mainland China is thriving, but whether these wafers meet automotive-grade standards remains to be seen.

In addition, the research report draws conclusions based on market conditions in different regions, divided into 4 regions:

United States

Morgan Stanley continues to be bullish on NVIDIA, believing that its performance is stronger than the market as a whole, but consolidating recent gains will still take time. Broadcom is recommended as an alternative choice in the AI field.

Western Digital remains Morgan Stanley's top pick, and although NAND data points are mixed, the HDD business will help it achieve a strong cycle.

The analog chip sector is expected to rebound in the second quarter, with ON Semiconductor being favored.

Europe

Interest in Arm has increased due to Apple's WWDC announcement and the increase in custom silicon, with analysis suggesting that Arm's licensing fees in the mobile field are expected to rise in the next 2-3 years.

ASML is also favored in Asia, with Taiwan Semiconductor expected to adopt High NA in 2028.

Greater China Region

The research report reiterates its bullish view on NVIDIA's GPU supply chain, including Taiwan Semiconductor, King Yuan Electronics, ASM Pacific Technology, and Sino Wealth Electronic.

Morgan Stanley is optimistic about MediaTek's long-term potential in the WoA AI PC chip opportunity.

South Korea

The DRAM market is being driven by supply and demand dynamics, and prices are not expected to ease in the second half of 2024.

SK Hynix is Morgan Stanley's top pick, with its HBM supply expected to increase significantly in 2025.

Source: Wall Street News.