A graphics processing unit (GPU) upgrade by Nvidia Corp is expected to drive growth in the global gaming industry this year and benefit local firms with high exposure to the sector, Yuanta Securities Investment Consulting Co (元大投顧) said in a client note on Friday.
The US chipmaker is to launch its new Ampere-based GPU in the second half of this year, leading to a rebound in demand for gaming GPUs and notebook computers after weaker-than-expected sales in the sector last year due to Nvidia digesting inventory, Yuanta said.
A successor to units based on the Turing architecture, Nvidia’s next-generation GPU based on the Ampere architecture is to adopt 7-nanometer technology, which would lead to a 50 percent increase in graphics performance while halving power consumption, the note said.
New Taipei City headquartered Micro-Star International Co (MSI, 微星科技), which makes gaming computers, graphics cards and motherboards, is expected to reap the most benefit, as 60 percent of the company’s sales come from the gaming sector, Yuanta said.
Gigabyte Technology Co Ltd (技嘉) and PC company Asustek Computer Inc (華碩) are also expected to benefit from the GPU upgrade, as about 30 percent of their revenues are rooted in the gaming business, it said.
MSI has the highest market share in the gaming business as it leads the gaming laptop market in terms of shipments ahead of Asustek, Dell Inc, Lenovo Group Ltd (聯想) and Acer Inc (宏碁), Yuanta said, citing data compiled by various research institutes.
The market for gaming laptops is expected to grow at a compound annual growth rate of 22 percent from 2016 to 2023, according to a Market Research Future report.
Asustek’s operations showed significant improvement in the second half of last year as the company’s restructuring efforts, which began in 2018, started to bear fruit, Yuanta said.
Gigabyte reported robust sales last quarter thanks to new Nvidia product launches, as well as strong server shipments.
The company’s server business is forecast to maintain a growth rate of about 20 percent this year, Yuanta said.
Yuanta issued a “buy” rating on MSI, Gigabyte and Asustek shares, with target prices of NT$112, NT$63 and NT$262 respectively.
MSI shares on Tuesday closed at NT$86.7 while Gigabyte shares were NT$49.7, having risen 13.48 percent and 23.63 percent last year respectively.
Asustek shares closed at NT$231.5, an annual gain of 14.89 percent.
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