Morgan Stanley believes that despite facing competition from NVIDIA GPUs, the AI ASIC (Application Specific Integrated Circuit) market will continue to expand, with 3nm projects becoming a key competitive area.

Charlie Chan, a Morgan Stanley Analyst, stated in a Research Report on December 15 that the ASIC market size will continue to grow, expecting the AI ASIC market size to increase from 12 billion dollars to 30 billion dollars between 2024 and 2027, with 3nm projects becoming a key competitive area.

Analysts indicate that several key 3nm ASIC projects are nearing finalization, including Amazon AWS's 3nm Trainium project, Google's 3nm TPU project, Microsoft's 3nm Maia200 project, and Meta's 3nm AI network project. Taiwan Semiconductor is expected to continue benefiting from this, but considering the open business and short-term catalyst potential, World CMOS is more worthy of investors' attention.

World CMOS, Marvell and other manufacturers are the main players.

In the AWS 3nm Trainium project, World CMOS and Marvell are engaged in intense competition, with Marvell increasing its CoWoS allocation.

Morgan Stanley's senior electronics analyst, Joe Moore, stated that Marvell's CoWoS allocation increased to about 0.07 million units, which means approximately 1.2 million Trainium chips, including Trainium 2.5, which is migrating to HBM for greater memory density.

Analysts believe that the market size for Trainium2 is continuing to expand (growing by 30%), which is a positive sign for the future market size of Trainium3 from Worldchip Electronics. The good execution capability of Worldchip Electronics may allow it to take responsibility for 3nm backend design services. The next round of the 2nm project (Trainium4) will witness a new round of competition between Worldchip Electronics and Marvell, but the project award will not be determined until the second half of 2025.

Meanwhile, MediaTek has made progress on Google's 3nm TPU project.

Currently, the Google TPU v7 3nm project is expected to enter mass production in 2026 due to delays in customer design plans. Given its high performance, this project focuses more on training. At the same time, Broadcom will launch another TPU version focused on inference in 2026, which may be more efficient in inference.

In the Microsoft 3nm Maia200 project, Marvell has an advantage in the upgraded version of this project. Although Creative Technology has seen an increase in demand for cryptocurrency mining chips, its share in this project has decreased.

Broadcom and Worldchip Electronics are both competing for the Meta 3nm AI networking project.

The MTIA v3 AI accelerator should migrate to HBM and CoWoS in 2026 and continue to use the RISC-V IP from Codemicro. Industry research indicates that Meta is not only customizing switch networks (links) for AI datacenters but also customizing RDMA-type network chips. Given Broadcom's strong SerDes IP, Morgan Stanley believes it should be the preferred choice.

Preferred stocks have shifted from Taiwan Semiconductor to Worldchip Electronics.

Morgan Stanley believes that although Taiwan Semiconductor continues to benefit from the 3nm project, Worldchip Electronics may be a better choice.

Analysts indicate that Taiwan Semiconductor currently produces all the mentioned ASIC chips. Taiwan Semiconductor will allocate 27% of CoWoS capacity for ASIC in 2025, which has a higher profit margin. By 2026, total revenue from AI Semiconductors is expected to account for 30% of its revenue.

However, for investors, in the short term, World Semiconductor might be more worthy of attention (with stronger short-term catalysts and better upside potential).

Supply chain investigations reveal that Taiwan Semiconductor will allocate CoWoS - R packaging capacity to Annapurna Lab in the second half of 2025, which may relate to World Semiconductor's production of 3nm chips. This aligns with Amazon AWS's recent announcement that it will launch Trainium3 at the end of 2025.

Analysts emphasize that the tape-out of the 3nm project in early 2025 will serve as a powerful catalyst for stock prices – it will help mitigate investor concerns regarding competition from Marvell in the 3nm project. With the expansion of Global AI capital expenditures and World Semiconductor's strong collaborative relationships with Taiwan Semiconductor, intellectual property suppliers, and AI clients, its strong growth momentum should be restored in 2026.