Source: Semiconductor Industry Watch. At yesterday's Conputex conference, Dr. Lisa Su released the latest roadmap. Afterwards, foreign media morethanmoore released the content of Lisa Su's post-conference interview, which we have translated and summarized as follows: Q: How does AI help you personally in your work? A: AI affects everyone's life. Personally, I am a loyal user of GPT and Co-Pilot. I am very interested in the AI used internally by AMD. We often talk about customer AI, but we also prioritize AI because it can make our company better. For example, making better and faster chips, we hope to integrate AI into the development process, as well as marketing, sales, human resources and all other fields. AI will be ubiquitous. Q: NVIDIA has explicitly stated to investors that it plans to shorten the development cycle to once a year, and now AMD also plans to do so. How and why do you do this? A: This is what we see in the market. AI is our company's top priority. We fully utilize the development capabilities of the entire company and increase investment. There are new changes every year, as the market needs updated products and more features. The product portfolio can solve various workloads. Not all customers will use all products, but there will be a new trend every year, and it will be the most competitive. This involves investment, ensuring that hardware/software systems are part of it, and we are committed to making it (AI) our biggest strategic opportunity. Q: The number of TOPs in PC World - Strix Point (Ryzen AI 300) has increased significantly. TOPs cost money. How do you compare TOPs to CPU/GPU? A: Nothing is free! Especially in designs where power and cost are limited. What we see is that AI will be ubiquitous. Currently, CoPilot+ PC and Strix have more than 50 TOPs and will start at the top of the stack. But it (AI) will run through our entire product stack. At the high-end, we will expand TOPs because we believe that the more local TOPs, the stronger the AIPC function, and putting it on the chip will increase its value and help unload part of the computing from the cloud. Q: Last week, you said that AMD will produce 3nm chips using GAA. Samsung foundry is the only one that produces 3nm GAA. Will AMD choose Samsung foundry for this? A: Refer to last week's keynote address at imec. What we talked about is that AMD will always use the most advanced technology. We will use 3nm. We will use 2nm. We did not mention the supplier of 3nm or GAA. Our cooperation with TSMC is currently very strong-we talked about the 3nm products we are currently developing. Q: Regarding sustainability issues. AI means more power consumption. As a chip supplier, is it possible to optimize the power consumption of devices that use AI? A: For everything we do, especially for AI, energy efficiency is as important as performance. We are studying how to improve energy efficiency in every generation of products in the future-we have said that we will improve energy efficiency by 30 times between 2020 and 2025, and we are expected to exceed this goal. Our current goal is to increase energy efficiency by 100 times in the next 4-5 years. So yes, we can focus on energy efficiency, and we must focus on energy efficiency because it will become a limiting factor for future computing. Q: We had CPUs before, then GPUs, now we have NPUs. First, how do you see the scalability of NPUs? Second, what is the next big chip? Neuromorphic chip? A: You need the right engine for each workload. CPUs are very suitable for traditional workloads. GPUs are very suitable for gaming and graphics tasks. NPUs help achieve AI-specific acceleration. As we move forward and research specific new acceleration technologies, we will see some of these technologies evolve-but ultimately it is driven by applications. Q: You initially broke Intel's status quo by increasing the number of cores. But the number of cores of your generations of products (in the consumer aspect) has reached its peak. Is this enough for consumers and the gaming market? Or should we expect an increase in the number of cores in the future? A: I think our strategy is to continuously improve performance. Especially for games, game software developers do not always use all cores. We have no reason not to adopt more than 16 cores. The key is that our development speed allows software developers to and can actually utilize these cores. Q: Regarding desktops, do you think more efficient NPU accelerators are needed? A: We see that NPUs have an impact on desktops. We have been evaluating product segments that can use this function. You will see desktop products with NPUs in the future to expand our product portfolio.

$Taiwan Semiconductor (TSM.US)$ It is one of the most important companies globally. Its manufacturing and technology capabilities far exceed its competitors, which enables it to produce chips for almost all leading technology companies worldwide.

The company benefits from huge investment tailwinds because of the strong market demand for chips, especially in the field of ai. But where will taiwan semiconductor be in three years? After all, its performance over these years will determine whether it is a good investment.

Small chips can have a big impact.

One reason taiwan semiconductor consolidates its leading position in the chip industry is its culture of continuous improvement. Currently, taiwan semiconductor is producing 3-nanometer chips. However, it is also developing 2-nanometer chips, which are expected to be ready by the end of 2025, with increased production in 2026. In addition, it is developing 1.4-nanometer chips, although these may not be released within three years.

Taiwan semiconductor's actions over the next three years will largely depend on the performance of the 2-nanometer chips and the strong performance of its other businesses in an environment where ai revenue is flourishing.

As early as the second quarter of 2023, management boldly predicted that ai-related revenue would grow at a 50% compound annual growth rate over the next five years, reaching a percentage of revenue in the teens. However, management severely underestimated the demand for ai-related chips; now, with ai revenue tripling year-on-year, the company expects ai revenue to account for a percentage of revenue in the teens by 2024.

This is a huge bullish signal, considering that many of the largest cloud computing service providers (or hyperscale providers) plan to increase their investment in ai infrastructure by 2025, which will be a significant bullish signal for taiwan semiconductor. Furthermore, its 2-nanometer chips will provide substantial momentum thereafter.

Strong growth forecast.

One of the biggest expenses for running these ai models is the energy consumed by the datacenter. One of the most popular graphics processing units (GPUs), Nvidia's H100, consumes roughly the same amount of electricity as a typical american household does in a year. Considering that thousands of such GPUs are used simultaneously in one server, the costs of running these devices can be extremely high.

But what if Nvidia can make them more energy-efficient?

This is the promise of taiwan semiconductor's 2-nanometer chips, with management indicating that these chips consume 25% to 30% less power than 3-nanometer chips when running at the same speed. This represents a significant cost saving, enough for companies to upgrade their GPUs. taiwan semiconductor's current demand already exceeds that for 3-nanometer and 5-nanometer chips.

As this chip achieves full production in 2026, it could become a significant revenue source for the company. This is entirely within our three-year time frame, and taiwan semiconductor stands to benefit immensely from this new technology.

So what will taiwan semiconductor look like three years from now? It is expected to be much better than now. Management anticipates a year-on-year revenue growth of about 30% in 2024, and wall street analysts predict a 25% revenue increase in 2025. Coupled with the growth leverage from the 2-nanometer chips in 2026, it appears that the company's revenue is likely to grow at around 20% for some time. This will drive greater profit growth, thus reducing taiwan semiconductor's valuation.

However, the current valuation of the stock is not high. taiwan semiconductor's pe is close to 22 times; while it is not the most expensive stock globally, it is not inexpensive either. However, considering the company's importance in the semiconductors industry, I believe this is a reasonable price.

Revenue from taiwan semiconductor is expected to grow rapidly in the next few years. It is believed that it will not only outperform the stocks in terms of performance but will also lead by a wide margin. The improvements in technology and business performance over the next three years should make this prediction come true.

Editor/Jeffy