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A “monumental shift” is underway in the semiconductor industry — and a raft of stocks are set to benefit, according to analysts at Morgan Stanley . In a Sept. 18 note, they highlighted a transition to “3D ‘gate-all-around’ architecture (GAA),” which they said presents a more than $10 billion “cumulative” opportunity for semi-cap original equipment manufacturers by 2030. “The transition to 3D ‘gate-all-around’ architecture marks a monumental shift for leading-edge logic chip architectures,” the analysts said. The transition, they added, “introduces a significantly improved 3D structure on which next generation (AI) chips will be built,” and will lead to a “fundamental change” when it comes to performance and electrical efficiency. Though industry players expect that initial gains will 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 Morgan Stanley expects will benefit: Lam Research is one of the stocks the bank rated overweight. The analysts said the company, a U.S. supplier of wafer-fabrication equipment, “expects to see a benefit from the move to GAA ramping through FY24.” VAT Group , a Swiss company for vacuum valves and related services, was also rated overweight. Morgan Stanley included the stock although it isn’t an equipment vendor “due to its exposure as a subcomponent supplier to Lam [Group], Applied Materials and ASM ([which have] a combined 45% of revenue).” Dutch company ASML Holding , which enables chipmakers to produce patterns on silicon with lithography, likewise, received an overweight rating. Morgan Stanley analysts agreed with the company’s statement that “gate-all-around is good for the industry, [so] good for ASML.” The bank also likes Intel , Samsung and TSMC , which it said have “all announced their intention to move towards GAA in the near term.” Morgan Stanley said TSMC and Intel are “laying the groundwork” for gate-all-around architecture, with pilot lines expected to be set up in the second half of 2024, while Samsung is already producing its first generation chips. The “main push,” it said, will likely be in 2025. “Although it’s too early to call the end result, the potential of reinvigorated competition should be a tailwind to advanced logic [wafer fab equipment] spend. Positioning will depend on progress made in FY24, where production will still largely be in trial (pilot) phase,” the analysts wrote. — CNBC’s Michael Bloom contributed to this report.
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