China's chips 'not as far behind Intel/AMD as some investors may think' - Bernstein
In its recent note covering the Chinese semiconductor market, Bernstein analysts initiated coverage on Hygon Information Technology with an Outperform rating.
On Tuesday, the broker released another analysis of the sector, saying it believes the x86 server central processing unit (CPU) makers such as Hygon are “not as far behind” Intel (NASDAQ:INTC) and AMD (NASDAQ:AMD) as some think.
“The CPU performance analysis shows that Hygon’s server CPU is about 2-3 years behind Intel’s and 3-4 years behind AMD’s,” analysts said.
“However, since Intel’s '18 gen still takes 25% of the market share in 2023, such a gap won’t stop Hygon from addressing a sizable portion of the Chinese market,” they added.
Since 2018, the Beijing-based chipmaker has launched four generations of x86 server CPU products, each delivering a performance improvement of 30%-50% over its predecessor, Bernstein highlighted.
Between 2017 and 2022, China's demand for x86 server CPUs grew at a compound annual growth rate (CAGR) of 9%, outpacing the global rate of 6%. This surge in demand is largely due to significant policy support for new infrastructure investments in Western China and the development of data centers in key national hubs and clusters.
“Looking ahead, we expect China’s demand to maintain an 8% CAGR over the next 3 years, on par with the world average, driven by high computing demand from AI and the rollout of next-generation CPU platforms,” Bernstein analysts noted.
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