Computing power is evolving into a core production factor for value creation within enterprises.
Guosen Securities Co.,Ltd. projects that ASIC chip shipments will reach approximately 7.7 million units in 2026, capturing a 45% market share, and is expected to surpass GPU share to reach 58% in 2027.
As the maturity of self-developed chips continues to improve, the firm anticipates that cloud service providers possessing ASIC capabilities are likely to see sustained benefits across both revenue growth and profit margins.
With ASIC demand surging rapidly, major cloud providers are gradually reclaiming leadership in chip design and proactively driving supply chain diversification.
As ASIC deployment scales, the industry bottleneck is progressively shifting from computing power to connectivity.
The Evolving Model Business and the Rise of Compute as a Core Factor
Since 2026, a significant shift in AI models has been their progression beyond a critical threshold for reliably executing tasks, with enhancements focusing on programming ability, long-context tasks, and tool usage.
As the value delivered by these models continues to expand, inference demand is entering a phase of rapid growth.
The potential for Anthropic to achieve profitability in a single quarter signals a gradual closing of the business model loop for AI companies, solidifying computing power's role as a fundamental production element for corporate value creation.
Accelerated ASIC Adoption Amidst Inference Demand and Maturing In-House Designs
Alongside the explosion in inference-side demand and the validation of companies' self-developed chip capabilities, ASIC shipments are entering an accelerated phase.
The projected shipment figures for 2026 and 2027 highlight this trend.
While Nvidia GPUs offer superior Transactions Per Second (TPS), ASICs demonstrate a more significant advantage from a Total Cost of Ownership (TCO) or Cost Per Token perspective, making them particularly well-suited for inference scenarios.
In-House ASICs as a Strategic Lever for Cloud Providers
Self-developed chips serve a dual purpose for cloud vendors: they help alleviate supply constraints for high-end GPUs, thereby boosting computing capacity, and they enable significant optimization of cost structures compared to externally procured GPUs, enhancing the profitability of cloud services.
As the sophistication of these proprietary chips advances, cloud providers with ASIC capabilities are positioned for ongoing gains in both revenue expansion and profit realization.
① Google: Leading peers in self-developed chip progress, its chips are slated for external sales starting in 2026, driving accelerated volume and cloud revenue growth. Proprietary chips already contributed to a 63% year-on-year increase in cloud revenue for Q1 2026. Shipments are forecasted to reach 500 units in 2026 and 1,500 in 2027, with external sales commencing in 2026, expected to account for 18% of cloud revenue by 2027.
② Amazon: External customer adoption of its Trainium chips is rising from 2026, with the overall chip business Annual Recurring Revenue (ARR) exceeding $20 billion, accelerating cloud income. Contracts with more external clients like Anthropic and OpenAI from 2026 indicate the chips have reached a mature, viable stage. With sustained shipment growth, Trainium is projected to contribute approximately a 4% revenue growth rate for AWS in 2027.
③ Alibaba: Its Zhenwu series chips have cumulatively shipped 560,000 units, with its cloud business potentially reaching an inflection point in profit margins during 2026.
Investment Implications from the ASIC Ascent
1) ASIC Design and Manufacturing Supply Chain. The rapid growth in ASIC demand is leading cloud giants to gradually reclaim chip design leadership and actively promote supply chain diversification, with core goals of achieving faster iteration, quicker delivery, and lower TCO. For instance, Google is reducing its reliance on Broadcom by introducing design partners like MediaTek and Marvell; AWS is also continuously optimizing the Trainium supply chain division of labor to reduce costs through enhanced internal control.
2) Networking and Interconnect Infrastructure. As ASIC deployment scales, the industry bottleneck is progressively shifting from computing power to connectivity. ① In the Scale-up direction, technologies like switch chips and Co-Packaged Optics (CPO) are poised to benefit from intra-rack connection upgrades. New-generation rack solutions, represented by Trainium3 with its NeuronSwitch-v1, are generating substantial incremental demand for PCIe chips. ② In the Scale-out direction, Google's Optical Circuit Switch (OCS) solution and its expanding large-scale network architecture are expected to drive demand growth for OCS chips, optical modules, and related optical communication components.
① Broadcom (AVGO): Benefits from both ASIC volume growth and rising connectivity demand, though its ASIC market share faces pressure. Previously holding over 80% market share in high-end ASIC design, it has fully benefited from TPU volume growth and ASIC demand from companies like Meta and OpenAI. However, its future share is likely to be impacted by Google's supply chain diversification efforts.
② Marvell Technology (MRVL): Positioned to gain from ASIC volume expansion, the rise of XPU attach strategies, and the connectivity demand surge. While facing potential risk of losing Trainium design share, the company is actively negotiating cooperation with Google while vigorously developing its XPU attach business. Simultaneously, it holds a dominant position in the optical interconnect DSP market, positioning it to fully benefit from increasing connectivity needs.
③ Coherent Corp. (COHR) (formerly II-VI): Primarily benefits from growing optical module demand. From 800G to 1.6T and subsequent 3.2T generations, both Average Selling Prices (ASP) and demand volumes are expected to rise continuously.
④ Lumentum Holdings Inc. (LITE): OCS contributions provide earnings leverage, alongside optical module demand growth. As a core supplier to Google, the company targets achieving $1 billion in annualized OCS chip sales by 2027. Given its previously more limited revenue base, the OCS demand unleashed by the TPU expansion could significantly contribute to earnings elasticity.
⑤ Arista Networks (ANET) (referenced as ALAB in context for PCIe switch): Benefits from PCIe switch chip volume growth. Transitioning from a monopoly in PCIe Retimer (Aries) products to PCIe Switch (Scorpio) and optical connectivity platforms, PCIe switch chips represent a major incremental opportunity.
Key Risk Factors
Potential risks include macroeconomic fluctuations, weaker-than-expected downstream demand, slower-than-anticipated upgrades in core technology levels, and intensifying competition as AI advancements become more democratized.
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