Morgan Stanley: Supply Side Becomes the New Bottleneck in AI; AI Semiconductor Market Expected to Grow by 60% by 2027

Morgan Stanley pointed out at the Asia AI Summit held in Taipei that the global construction of artificial intelligence infrastructure is accelerating, and the main bottleneck in the AI chip industry has shifted from the demand side to the supply side.

Analyst Charles Chan stated that the coordinated expansion of semiconductor ecosystems such as wafer foundry, CoWoS advanced packaging, high-bandwidth memory, and ABF substrates will become the core driving force for the next stage of industry growth. Due to large cloud service providers continuing to increase capital expenditures, it is estimated that the global AI-related semiconductor market will achieve a compound annual growth rate of 50% to 60% by 2027.

As the focus of artificial intelligence computing shifts to intelligent body systems capable of performing tasks autonomously, central processing units (CPUs) are entering a new cycle of demand growth outside of graphics processing units (GPUs). Morgan Stanley estimates that the annual growth rate of CPU demand will reach 30% to 40%, significantly higher than the historical average, with processors based on ARM architecture showing even stronger performance. This trend will also drive the demand for peripheral supporting chips to rise concurrently, indicating that the current AI dividend has a broad universality.

The trend of cloud service providers developing their own chips is reshaping the market structure, and application-specific integrated circuits (ASICs) are expected to enter a significant explosion period by 2027. Major tech giants are allocating more high-end manufacturing and packaging capacity to self-developed custom chips. Once the technology is mature and mass production is stable, their cost-effectiveness advantages will far exceed that of GPUs. Although the development complexity of such chips is high, after scaling up delivery, their growth potential may even surpass that of GPUs.

The expansion of global infrastructure expenditure is driving a robust increase in Taiwan's semiconductor exports, and this prosperous cycle is expected to continue at least until 2027. The external technological cycle benefits will further penetrate into other local industries, helping to promote the diversification of its economic structure by improving domestic consumption and investment trends.