Big U.S. technology companies such as Nvidia, Microsoft and Alphabet have benefited from the boom in artificial intelligence in the market over the past year. But many smaller companies in the global AI supply chain will also benefit. Bank of America said in a March 15 report that the artificial intelligence market has “boomed” since the second half of 2023, with a variety of artificial intelligence solutions. Most wafers rely on TSMC’s production, with wafers and integrated circuit designs coming from around the world or Taiwan, and some wafers and integrated circuit designs coming from around the world or Taiwan. Bank of America said the parts come from Greater China. “The scarcity of AI/compute suppliers helps improve added value and bargaining power, especially for expensive AI products,” Bank of America analysts wrote. The bank listed areas in the supply chain expected to benefit from artificial intelligence. ’s various segments, as well as the top stocks in each category. The bank noted that server original design manufacturers have partnered with Taiwanese manufacturers on highly customized projects such as artificial intelligence graphics processing units. Here are Bank of America’s top picks among such manufacturers or suppliers: Quanta: The investment bank said it is a top original design manufacturer with a diverse customer base. Bank of America pointed out that it has been working with Google for more than a decade due to Google’s ability to produce highly customized server designs. Wistron: This is a major graphics processing unit substrate supplier, according to the bank. As AI server applications and GPU supply increase, the AI server GPU substrate business is expected to account for 3% to 6% of Wistron’s total sales in 2024 and 2025. This is up from 1% in 2023. Foxconn Industrial Networks: Bank of America noted that this is a major partner of Microsoft and Nvidia through its subsidiary Ingrasys. It also pointed out that Foxconn Industrial Internet has supported Microsoft’s OpenAI for many years. Hardware technology Hardware technology such as printed circuit boards is the upstream part of the AI server supply chain. Bank of America said these materials or components “will always be needed.” Here are Bank of America’s top picks in this field: Bank of America said that Xinxing Microelectronics and NYPCB are leaders in technology and product development related to artificial intelligence and high-performance computing. However, the bank said Sunshine is growing faster in AI server-related revenue, as evidenced by its “proven track record” of producing printed circuit boards for Nvidia. Semiconductor Bank of America said chip design is becoming more expensive as it becomes more complex and the cost of developing the physical components increases. But the bank said that as more advanced technology is needed to make chips for artificial intelligence applications, there is “increasing reliance” on companies with a “proven track record” in designing customized chips. Bank of America analysts wrote: “We believe finding trustworthy providers of IP and design services will become even more important in the AI era as overall R&D investments become more expensive and customers (chip designers) shy away from failure. “Overall, IP and design services represent only a small portion of the entire global semiconductor market, but are becoming increasingly important as wafer performance depends heavily on the quality of IP and wafer design.” Against this backdrop, the bank listed Taiwanese stocks Alchip and eMemory as key beneficiaries. Bank of America also pointed out that MediaTek, Asia’s leading fabless company, is an indirect beneficiary of the artificial intelligence server trend. The bank said it sees “strong upside” as MediaTek expands its custom chips to hyperscale enterprises. Additionally, Bank of America noted that its partnership with Nvidia in automotive AI should expand its AI opportunities. —CNBC’s Michael Bloom contributed to this report.
