Chipmakers are set to be ‘winners’ as the metaverse takes off

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  • Widely seen as the next generation of the Internet, the metaverse broadly refers to a virtual world where humans interact via three-dimensional avatars that can be controlled via virtual reality headsets.
  • However, profits to chipmakers will be “unequal”, Morningstar said in a report last week.
  • In such a cashless virtual environment, blockchain technology and cryptocurrencies can also play an important role.

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Analysts say the metaverse, which requires massive amounts of computing power, is poised to benefit global chip makers—but other tech-related industries could also benefit from it.

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Widely seen as the next generation of the Internet, the metaverse broadly refers to a virtual world where humans interact via three-dimensional avatars that can be controlled via virtual reality headsets such as Oculus. Is.

Through the Metaverse, users can engage in virtual activities such as gaming, virtual concerts or live sports.

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The Metaverse garnered a lot of attention last year, when social networking giant Facebook announced it was changing its name to Meta in October.

Analysts said big tech firms would benefit as technologies related to that virtual world emerge.

“The Metaverse winners are really the technology companies,” DBS Bank chief investment officer Hou Wei Fook told Businesshala’s “Squawk Box Asia” on Monday. Semiconductor firms will be a clear beneficiary because the metaverse will require a lot of computing power, he said.

However, profits to chipmakers will be “unequal”, Morningstar said in a report last week.

“Since many of the tasks that take place in the ‘Metaverse’ involve the real-time processing of large amounts of data, this will require the included chips to use advanced process nodes that are only available at TSMC, Samsung and Intel. ” ,

Smaller casters such as United Microelectronics Corporation, SMIC and GlobalFoundries Morningstar said only low-value parts of the supply chain could benefit, such as power management and performance drivers.

Last year, shares of chipmaker Nvidia climbed 125% on Metaverse expectations. Businesshala’s Jim Cramer chose Nvidia as one of four major stocks that investors should buy if they want to bet on the success of the Metaverse.

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In a December report, private banking firm Lombard Odier said other core areas set to support the metaverse infrastructure that investors could consider are supplying “key building blocks”, such as cloud computing, artificial Intelligence and video game graphics.

In such a cashless, virtual environment, blockchain technology and cryptocurrencies can also play an important role. The bank said that blockchains that support non-fungible tokens, or NFTs — digital tokens that represent proof of ownership of assets such as art, collectibles or memes — could create an “interesting” ecosystem for digital content creation and monetization. .

“These could provide the right to use artifacts created in the metaverse or creatures of their own, opening the door to a new virtual economy. In this realm, human creativity has virtually no limits,” the firm said.

Facebook parent Meta, as well as Apple, Microsoft and Google are gearing up to release new hardware products and software services for the Metaverse.

In Asia, China is set to make a big move on the metaverse as well. Its largest city, Shanghai, included the metaverse in its five-year development plan. The plan called for “encouraging the application of the Metaverse in areas such as public services, business offices, social entertainment, industrial manufacturing, production security and electronic games”.

— Businesshala’s Evelyn Cheng

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