TSMC, ASEH, KYEC and Unimicron to benefit from Nvidia results: Citi

Investing.com -- Citi analysts highlighted the strong implications of Nvidia’s recent earnings results for key supply chain partners, including TSMC, ASEH, KYEC, and Unimicron, in a note on Thursday.

The bank said Nvidia’s results showcased another beat of market expectations, with FY3Q24 revenues up 94% year-over-year, driven by a remarkable 112% YoY growth in data center sales.

They add that Nvidia’s H200 GPUs has marked the fastest product ramp in the company’s history.

Looking ahead, Nvidia’s new Blackwell GPU is said to already be in high demand. Nvidia (NASDAQ:NVDA ) shipped 13,000 Blackwell GPU samples in the October quarter, including one of the first Blackwell DGX to OpenAI.

CEO Jensen Huang assured investors that Blackwell production is ramping up smoothly, stating that Nvidia will ship more Blackwell GPUs this quarter than initially estimated.

TSMC, a critical Nvidia partner, is set to benefit significantly, according to Citi. They state that TSMC’s AI-related revenue is expected to triple in 2024 and double into 2025, with Nvidia projected to account for nearly 20% of TSMC’s revenue next year.

Citi also notes TSMC’s plans to double its CoWoS capacity in 2025 to meet Nvidia’s tight demand.

Other supply chain players, including ASE Technology and King Yuan Electronics, are also said to be poised for growth. Citi says ASEH is expected to generate over $1 billion in CoWoS-S revenue next year, benefiting from higher ASPs and gross margins.

Meanwhile, the bank believes KYEC will likely maintain a significant share in Blackwell GPU final testing, leveraging its expertise in managing complex, high-power GPU testing processes.

For HDI/ABF, Citi likes Unimicron, noting that the name has a "dominant share in compute/switch trays for HDI and would start to supply ABF for Blackwell GPU/Grace CPU/NVLink."

"The promising outlook shared by Nvidia has reinforced our positive view on its key supply chain partners under our coverage, such as TSMC, ASEH, KYEC and Unimicron," concluded Citi.

Source: Investing.com