The introduction of Intel’s INTC newest artificial intelligence chip, Gaudi 3, is projected to benefit three global semiconductor companies significantly.
What Happened: According to Morgan Stanley, TSMC TSM, Alchip ALCPF and Wistron WICOF stand to gain the most from the demand for Intel’s latest AI chip, CNBC reported on Tuesday. The financial institution anticipates that Intel’s supply issues will be resolved in the second half of 2024, leading to a surge in confirmed sales.
TSMC will be responsible for the fabrication of Gaudi 3 chips using its latest-generation 5-nanometer process. Alchip is expected to provide design services for both Gaudi 2 and Gaudi 3, while Wistron is predicted to be the primary baseboard supplier.
Charlie Chan and his team at Morgan Stanley forecast that the total Gaudi shipment volume could hit 300-400k units in 2025, generating $2-3bn revenue for Intel. The investment bank also reiterated its overweight rating on Alchip and TSMC, considering them long-term winners in AI semiconductor demand.
Why It Matters: The insatiable demand for AI has already propelled TSMC’s net revenue growth by 16.5% YoY in Q1 2024. The company’s broad customer base, including AI chip leader NVIDIA and tech giant Apple, is expected to drive further growth.
Earlier this year, Alchip relocated its research and development roles from China to Japan, indicating a strategic shift in the global semiconductor industry. The company’s anticipated involvement in the design of Intel’s Gaudi chips aligns with this expansion strategy.
Intel’s stock has been consolidating since October 2023, with Reddit users speculating about its undervaluation. The launch of the Gaudi 3 chip could potentially boost Intel’s stock value, especially if supply constraints are resolved as predicted.
Price Action: As of Tuesday, Intel’s stock closed 0.41% at $34.27, according to Benzinga Pro.
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