Arm-based PC chips will drive tech stocks higher | Wilnesh News
Morgan Stanley said that the global semiconductor industry is about to undergo a “transformation” due to artificial intelligence PCs equipped with chips developed by British chip design company Arm. This is because more powerful computers are needed to run AI applications. Morgan Stanley pointed out that Microsoft requires the new artificial intelligence PC to have a computing power of 45 trillion operations per second to correctly run its artificial intelligence tool Copilot in a notebook computer. “Running generative AI applications in the background will be a key challenge for future laptop battery life and thermal design,” analysts at the bank wrote in a May 7 report. Morgan Stanley noted that based on Arm’s CPUs are known for their power efficiency and thermal control, which can extend battery life and enable more compact designs, adding that they “demonstrate significant advantages in terms of power efficiency”. As a result, the bank expects Arm-based AI PCs to “begin a transformation that will impact the global semiconductor industry.” Today, the average Windows PC runs on processors such as Intel, AMD, and Qualcomm. Morgan Stanley added that it believes Apple may also expand its Arm-based CPUs into artificial intelligence servers. The bank expects AI PC penetration to reach 95% by 2027, up from 8% in 2024. % market share, by 2028, total WOA PC chip shipments will reach 65 million. Windows on Arm is the term for AI PCs running Arm chips. Stocks Which stocks will benefit from Arm’s move into artificial intelligence PCs? Morgan Stanley named TSMC, MediaTek, Nvidia, Qualcomm, Microsoft and Arm itself. PC OEMs that “invest resources” in WOA devices should also benefit, the report said. It is said that Nvidia and Taiwan MediaTek are expected to cooperate to launch the first WOA PC CPU chip, which is an “interesting story.” The two companies have formed a partnership to develop automotive chips and software. It raised MediaTek’s stock price target by 8% to NT$1,388 (US$42.81), implying an increase of nearly 27%. As for TSMC, Morgan Stanley said that its foundry market share in the “x86” CPU market will grow. x86 is a widely used CPU architecture. This is thanks to Intel outsourcing its CPU production and AMD’s increasing market share, which bodes well for TSMC, which is AMD’s main foundry partner. “However, TSMC’s foundry market share for Arm-based CPUs is much higher than for x86, as Intel still produces the majority of its own x86 CPU products,” Morgan Stanley said. “As a result, we believe Arm’s market share relative to x86-based CPUs is Share growth is positive for TSMC, and it believes that the popularity of Arm CPU may bring more incremental revenue to TSMC than x86 in the next few years.” The bank raised TSMC’s target stock price by 8% to NT$928. , the potential upside is 16%. —CNBC’s Michael Bloom contributed to this report.