Google's in-house artificial intelligence (AI) inference chip, the tensor processing unit (TPU), is in the spotlight. Google trained its next-generation AI model "Gemini 3.0 (Gemini 3)" entirely on TPUs, and the model has delivered performance on par with threatening ChatGPT. Investor expectations for the customized TPU chip's results are also growing.
Reflecting that optimism, Alphabet (Class A), Google's parent, climbed intraday to $328.83 on the 25th last month, setting a new 1-year high. After news that Warren Buffett's Berkshire Hathaway bought more than 6 trillion won worth of Alphabet shares this year, some in the market said Buffett's call was right again.
There is growing speculation that Google could sell TPUs externally like Nvidia, rather than using them only internally for its Google Cloud Platform (GCP) data centers. With Meta Platforms (Meta), the operator of Facebook, reportedly discussing a multibillion-dollar purchase of TPUs, analysts say demand for TPUs could expand sharply among big tech corporations that have sought to move away from Nvidia.
Investors are hunting for beneficiaries on hopes that TPUs could open a new market beyond merely supplementing existing GPUs. The first name that comes up is Broadcom. The TPU is a chip Google co-developed with Broadcom, the U.S. fabless (design) semiconductor company, to power AI.
Global investment bank (IB) Bank of America (BofA) raised its price target for Broadcom the previous day to $460 from $400. The view is that as Google increases TPU usage, Broadcom, its key design partner, will directly benefit. Overnight, Broadcom closed around $386.
In Korea, ISU Petasys is cited as a core value chain player for Google's TPUs. ISU Petasys holds a dominant 40% share in printed circuit boards (PCBs) used in TPUs. The industry expects a steep earnings improvement as both prices and volumes enter an expansion phase centered on TPUs.
There is also analysis that ISU Petasys is an irreplaceable choice in the so-called "TPU cycle." Yang Seung-su, a researcher at Meritz Securities, said, "After Google officially signed a supply contract with Anthropic for 1 million TPUs recently, demand will increase stepwise as it adds more customers," adding, "The new 7th-generation TPU volumes supplied by ISU Petasys from June are understood to have more than doubled versus the plan at the start of the year."
With word that each TPU is equipped with six to eight High Bandwidth Memory (HBM) units, Samsung Electronics and SK hynix have emerged as new beneficiaries. Analysts say that as strong incremental demand is expected to arise in the existing HBM market, these companies will play key roles in Google's TPU supply chain.
The market especially expects Samsung and SK hynix to absorb new demand by forming a two-strong structure based on superior production capacity compared with Micron. Korea Investment & Securities estimated this year's HBM supply share within Google TPUs at 56.6% for SK hynix and 43.4% for Samsung Electronics.
Chae Min-suk, a researcher at Korea Investment & Securities, said, "An increase in Google's HBM adoption will be a catalyst that further deepens the HBM supply shortage," and added, "We should maintain a positive view on both SK hynix and Samsung Electronics, which can simultaneously benefit from higher average selling prices (ASPs) due to the shortage and rising shipments."