Morgan Stanley: Greater China Semiconductors — Bullish on Cloud, Memory and Optical Outlook; Accumulating Ahead of GTC
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Morgan Stanley reiterates an Attractive view on Greater China semiconductors, advising investors to accumulate positions ahead of GTC. The firm highlights constructive outlooks for cloud, memory, and optics, driven by AI spillover effects and data center expansion. Co-packaged optics (CPO) technology is expected to benefit significantly from AI infrastructure build-outs.
In the memory sector, Winbond is designated as a Top Pick. Other Overweight (OW) ratings include Nanya Tech, APMemory, GigaDevice, and Macronix. For AI and data center semiconductors, Aspeed and WT Micro carry OW ratings. Within the CPO space, TSMC, ASE, AllRing, KYEC, and FOCI all receive OW ratings.
Long-term demand drivers include technology inflation, where rising wafer, OSAT, and memory costs are expected to compress margins for chip designers. Additionally, the AI substitution effect is causing supply chains to prioritize AI-related semiconductors, exacerbating shortages in non-AI segments. Meanwhile, DeepSeek has triggered domestic inference demand, though the potential shipment of NVIDIA H200 chips may dilute the local GPU supply chain.
Key price targets include TSMC at 2,288.0 TWD (21% upside), GigaDevice at 414.0 CNY (45% upside), and Winbond at 155.0 TWD (37% upside). The comprehensive valuation comparison spans foundry, OSAT, memory, IDM, equipment, and fabless design subsectors.