AMD’s Taalas Deal Strengthens Custom AI Inference; UBS Sees NAND Upside and Broad Analog Recovery
UBS’s SemiBytes report covers three themes.
UBS’s SemiBytes report covers three themes.
AMD’s acquisition of Taalas expands its custom AI inference portfolio. Taalas hard-codes trained model weights directly into silicon, eliminating the need to retrieve weights from memory and sharply reducing the memory bottleneck in inference.
Persistent KV Cache demand could grow explosively. SNDK estimates that capacity demand could reach approximately 1ZB by C2030, equivalent to more than 70% of the industry’s C2027E bit supply. NAND capacity expansion is constrained because cleanroom capacity is being prioritized for HBM and DDR, which could tighten supply and support NAND pricing.
The analog chip industry is showing a broad recovery. 2Q revenue was 1.7% above expectations, while 3Q guidance was 1.6% above expectations. Full-year CY26 and CY27 revenue estimates were raised by approximately 1.5% and 3%, respectively. UBS names TXN its top analog-sector pick, citing market-share gains and fixed-cost leverage; its CY26E estimate was raised by 2.6%, the largest increase across the companies covered.
Industrial demand remains approximately 7% below trend, and automotive demand is also approximately 7% below trend. MCU demand remains approximately 13% below trend, while analog excluding MCU is above trend.
In summary, UBS says AMD’s Taalas acquisition strengthens its custom AI inference capabilities; an approximately 1ZB surge in KV Cache demand combined with constrained NAND capacity points to tighter memory supply and demand; and the analog chip industry is recovering broadly, with TXN as the preferred name.
UBS’s positive views include AMD, because the Taalas acquisition broadens its AI inference offering; TXN, as its top analog-sector pick with a 2.6% CY26E estimate increase; NAND and SSD-related names such as SNDK, because of KV Cache demand and constrained supply; MRVL, for CXL and optical disaggregated-memory exposure; and the analog sector overall. UBS views the MCU sector as neutral because it remains approximately 13% below trend.
Potential catalysts identified by UBS are: 1) progress integrating AMD and Taalas and the release of an AI inference product roadmap; 2) NAND manufacturers’ capacity-expansion plans and capital-expenditure guidance; 3) additional disclosure from hyperscalers on persistent KV Cache deployments; 4) pricing-increase announcements in subsequent analog-company earnings reports; and 5) progress toward commercialization of MRVL’s optical disaggregated-memory and CXL products.
AMD’s acquisition of Taalas expands its custom AI inference portfolio. Taalas hard-codes trained model weights directly into silicon, eliminating the need to retrieve weights from memory and sharply reducing the memory bottleneck in inference.
Persistent KV Cache demand could grow explosively. SNDK estimates that capacity demand could reach approximately 1ZB by C2030, equivalent to more than 70% of the industry’s C2027E bit supply. NAND capacity expansion is constrained because cleanroom capacity is being prioritized for HBM and DDR, which could tighten supply and support NAND pricing.
The analog chip industry is showing a broad recovery. 2Q revenue was 1.7% above expectations, while 3Q guidance was 1.6% above expectations. Full-year CY26 and CY27 revenue estimates were raised by approximately 1.5% and 3%, respectively. UBS names TXN its top analog-sector pick, citing market-share gains and fixed-cost leverage; its CY26E estimate was raised by 2.6%, the largest increase across the companies covered.
Industrial demand remains approximately 7% below trend, and automotive demand is also approximately 7% below trend. MCU demand remains approximately 13% below trend, while analog excluding MCU is above trend.
In summary, UBS says AMD’s Taalas acquisition strengthens its custom AI inference capabilities; an approximately 1ZB surge in KV Cache demand combined with constrained NAND capacity points to tighter memory supply and demand; and the analog chip industry is recovering broadly, with TXN as the preferred name.
UBS’s positive views include AMD, because the Taalas acquisition broadens its AI inference offering; TXN, as its top analog-sector pick with a 2.6% CY26E estimate increase; NAND and SSD-related names such as SNDK, because of KV Cache demand and constrained supply; MRVL, for CXL and optical disaggregated-memory exposure; and the analog sector overall. UBS views the MCU sector as neutral because it remains approximately 13% below trend.
Potential catalysts identified by UBS are: 1) progress integrating AMD and Taalas and the release of an AI inference product roadmap; 2) NAND manufacturers’ capacity-expansion plans and capital-expenditure guidance; 3) additional disclosure from hyperscalers on persistent KV Cache deployments; 4) pricing-increase announcements in subsequent analog-company earnings reports; and 5) progress toward commercialization of MRVL’s optical disaggregated-memory and CXL products.