Analysts at Morgan Stanley say “big changes” are underway in the semiconductor industry, and many stocks are expected to benefit. In a Sept. 18 memo, they highlighted the transition to “3D ‘gate-all-around’ architecture (GAA),” which could cost sub-cap OEMs more than $10 billion by 2030. He said it brings “cumulative” opportunities. “The move to 3D ‘gate-all-around’ architectures represents a monumental change for state-of-the-art logic chip architectures,” the analysts said. They added that this transition would “introduce vastly improved 3D structures on which next-generation (AI) chips will be built,” resulting in “fundamental changes” in terms of performance and electrical efficiency. While industry observers expect initial profits to be “relatively subdued,” Morgan Stanley is optimistic that the shift will create a “roadmap into the next decade.” Stock Picks Here are some of the stocks he thinks Morgan Stanley will benefit from: Lam Research is one of the stocks the bank rates as overweight. Analysts said the U.S. wafer manufacturing equipment supplier “expects the benefits of GAA transition to continue into FY24.” VAT Group, a Swiss company that provides vacuum valves and related services, was also rated Overweight.Although Morgan Stanley is not an equipment vendor, it included the stock “because of its exposure to Ram as a subcomponent supplier.” [Group]Applied Materials and ASM ([which have] ASML Holding, a Dutch company that helps semiconductor manufacturers create patterns on silicon using lithography, also received an overweight rating. Morgan Stanley analysts agreed with the firm’s statement that “gate-all-around is good for companies.” industry, [so] Morgan Stanley said TSMC and Intel are “laying the groundwork” for Gateall, and Intel, Samsung and TSMC have “all announced intentions to move to GAA in the near term.” The pilot line is expected to be installed in late 2024, and while Samsung is already producing first-generation chips, the company said the “main thrust” is likely to come in 2025.What will be the final result? The possibility of revitalizing competition should be a tailwind for advanced logic. [wafer fab equipment] spend. “Positioning will depend on progress in FY24, where production is still largely in the pilot stage,” the analysts wrote. —CNBC’s Michael Bloom contributed to this report.
