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- An advanced chipmaking technology known as EUV "will enable the next wave of AI", according to Goldman Sachs.
- Goldman analyst Alexander Duval sees the tech boosting the semiconductor industry to over $1 trillion.
- "This is a gamechanger for the semiconductor industry. I'd say this isn't rocket science; it's harder than rocket science," he said.
The sensational debut of ChatGPT heralded the rise of artificial intelligence as a transformational technology this year, igniting a wave of excitement among investors and businesses.
The AI theme has taken the stock market by storm in 2023, fueling stunning rallies in tech names such as Nvidia, Meta Platforms and Tesla — and even helping broad equity indexes such as the S&P 500 to advance despite the looming risk of a recession.
But all that may be just the beginning.
The next wave of AI will be enabled by an advanced chipmaking technology — known as extreme ultraviolet lithography or EUV — that's set to transform high-intensity computing infrastructure, according to Goldman Sachs.
The cutting-edge tech will boost the global semiconductor industry to $1 trillion by the end of the decade from $600 billion currently, according to Alexander Duval, lead analyst for Europe tech hardware and semiconductors for Goldman Sachs Research.
"The development of the latest iteration of this technology known as High NA, the next stage in the evolution of EUV, is a technology which took more than 20 years to perfect. It relies on a lens so precisely engineered that if it were expanded to the size of the Earth, the biggest blemish would be smaller than the size of a fingernail," the Wall Street bank said in a recent note.
Semiconductors serve as the foundation for the AI industry, and this is driving up the stock-market valuations of chipmakers. Nvidia is the best performer of the year in the S&P 500 index with a whopping 222% jump. Its rival AMD has advanced 78%.
In late May, Nvidia joined the exclusive club of companies with market cap in excess of $1 trillion: alongside Apple, Microsoft, Alphabet, and Amazon.
'Harder than rocket science'
"This is a gamechanger for the semiconductor industry," Goldman's Duval said, referring to EUV technology. "I'd say this isn't rocket science; it's harder than rocket science."
"We see it as key in facilitating the production of more and more powerful chips for use cases such as AI, high-powered computing, and autonomous driving," he added.
The technology is based on lithography, which is the process of using light to create an image of the printed circuit on a semiconductor, the bank said, adding deep ultraviolet light has been used to create these images for years now.
"We expect shipments of the first EUV machines by the end of the year, and the High NA EUV to be delivered by 2025. There's already a double-digit number of orders for these machines — and remember we're talking about €300 million-€400 million per machine" Duval said.