Intel call sends a strong signal on cloud server CPU demand, benefiting Greater China cloud semiconductors

Overview

This report uses Intel's 2Q26 earnings call as the trigger event to map implications across Greater China cloud semiconductor companies. The core judgment is that Intel's comments on data center and AI demand, x86 server CPU demand, custom ASIC business, and supply constraints reinforce the positive cycle in cloud semiconductors and are broadly positive for covered names such as Aspeed Technology and Montage Technology.

Core views

The report believes AI compute demand is driving a strong and sustainable spending environment among cloud and enterprise customers, leading to an upward revision in the server CPU industry demand outlook. Intel's custom ASIC business is currently running at about US$2bn in revenue, and management expects it to reach US$4bn in the near term. For Greater China cloud semiconductors, strong demand, specification migration, and localization trends are the main supports; Aspeed benefits from cloud demand and specification migration, while Montage benefits from cloud capex, DRAM interface technology migration, and its localization position in China's data center semiconductors.

Analysis framework

The report applies an event read-through approach, mapping management comments from Intel's earnings call on demand, supply, customer orders, and industry growth to the Greater China cloud semiconductor companies covered by Morgan Stanley. The valuation section is based on the residual income model and discloses key assumptions such as cost of capital, mid-term growth rate, terminal growth rate, and payout ratio.

Methodology notes

• Valuation methodsResidual income model

  base case residual income model

  Aspeed's valuation uses a base-case residual income model, with key assumptions including a 9.8% cost of equity, a 21.4% mid-term growth rate, a 5.5% terminal growth rate, and an 85% cash payout ratio.

• Valuation methodsResidual income model

  residual income model for Montage

  Montage's valuation assumptions include an 8.4% cost of equity, a 30% payout ratio, a 19.3% mid-term growth rate, and a 4% terminal growth rate, and use an exchange rate of 1.15 HKD to 1 RMB while assuming no discount of the H-share relative to the A-share.

• Industry read-throughCross-mapping from earnings call

  read-across from Intel earnings call

  The report uses Intel's comments on data centers, AI, server CPUs, custom ASICs, and supply bottlenecks as external signals for assessing demand and earnings prospects for Greater China cloud semiconductors.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Aspeed Technology (5274.TWO)

  Positive read-through name, rated Overweight

  Strengths

  Benefits from strong cloud demand, server CPU industry growth, and specification migration; target price history shows the latest target price at TWD 20,888.

  Weaknesses

  Sensitive to cloud demand and the pace of specification migration.

  Comparison

  Relative to the Greater China cloud semiconductor coverage universe, the report identifies it as one of the main beneficiaries of the positive signals from Intel's earnings call.

  Risks

  Weakening cloud demand, slower-than-expected specification migration, intensified competition, and further tightening of China policy.

• Montage Technology Co Ltd (6809.HK)

  Positive read-through name, rated Overweight

  Strengths

  Benefits from growth in cloud capex, DRAM interface technology migration, and its localization position in China's data center semiconductors; latest target price is HK$432.

  Weaknesses

  Valuation depends on assumptions for mid-term growth, exchange rate, and no H-share discount relative to the A-share.

  Comparison

  Along with A-share Montage, it is a core covered asset; the H-share valuation uses an exchange rate of 1.15 HKD to 1 RMB and assumes no H-share discount.

  Risks

  Weaker-than-expected cloud demand, slower-than-expected DRAM interface technology migration, and delays in new product launches.

• Montage Technology Co Ltd (688008.SS)

  Positive read-through name, rated Overweight

  Strengths

  Strong localization position in China's data center semiconductors, benefiting from cloud capex and DRAM interface technology migration; latest target price is Rmb377.

  Weaknesses

  Highly dependent on cloud capex, technology migration, and the pace of new products.

  Comparison

  Forms an A/H dual-listing mapping with 6809.HK, and the report assumes no discount of the H-share relative to the A-share.

  Risks

  Weaker-than-expected cloud demand, slower-than-expected DRAM interface technology migration, and delays in new product launches.

• Intel

  Source of the external event and industry demand signal, not the main rated name in this report

  Strengths

  The earnings call showed accelerating DCAI demand, a strengthened role for x86 CPUs in AI infrastructure, and a higher run rate for the custom ASIC business.

  Weaknesses

  The industry's main challenge has shifted to expanding supply to meet demand, while wafer, memory, and substrate supply remain constrained.

  Comparison

  Its earnings call is used as a cross-check for Greater China cloud semiconductor companies rather than as the core of a direct investment rating.

  Risks

  If Intel's demand or supply outlook changes, the strength of the read-through could decline.

Key data

• Current revenue run rate of Intel's custom ASIC businessUS$2bnIntel management said it could reach a US$4bn run rate in the near term.
• Expected growth of the server CPU industryStrong double-digit growth this year and nextIntel management expects the momentum to extend through 2028.
• Aspeed Technology target priceTWD 20,888Target price history shows the latest target price as of 2026-07-23.
• Aspeed Technology reference share priceNT$14,730.00The price date in the analyst rating table is 2026-07-24.
• Montage Technology 6809.HK target priceHK$432Target price history shows the latest target price as of 2026-07-16.
• Montage Technology 6809.HK reference share priceHK$332.60The price date in the analyst rating table is 2026-07-24.
• Montage Technology 688008.SS target priceRmb377Target price history shows the latest target price as of 2026-07-16.
• Montage Technology 688008.SS reference share priceRmb233.66The price date in the analyst rating table is 2026-07-24.

Impact & implications

If Intel's view on server CPU and AI infrastructure demand plays out, the Greater China cloud semiconductor chain may continue to benefit from expanding cloud capex, stronger customer orders, specification migration, and localization substitution. For investors, the report leans toward supporting increased allocation to semiconductor names with exposure to cloud demand and benefits from technology migration, while also warning that supply bottlenecks, competition, and the policy environment remain key variables.

Risks

• Weakening cloud demand or a customer spending environment below expectations.
• Growth in server CPU or AI infrastructure demand falling short of Intel management's expectations.
• DRAM interface technology migration slower than expected.
• Delays in new product launches.
• Intensified competition, compressing profitability or market share.
• Supply constraints in wafers, memory, substrates, and other areas limiting revenue realization.
• Further tightening of China policy.
• Morgan Stanley has investment banking, shareholding, or other service relationships with some covered companies, and investors should pay attention to disclosures of potential conflicts of interest.

What to watch

• Changes in Intel's subsequent quarterly DCAI demand, server CPU orders, and custom ASIC run rate.
• Whether double-digit growth in the global server CPU industry this year and next can materialize, and whether it will continue through 2028.
• Cloud customer capex, AI compute deployment, and enterprise customer procurement pace.
• Whether supply constraints in wafers, memory, and substrates ease.
• Aspeed's specification migration progress and competitive dynamics.
• Montage's DRAM interface technology migration, new product launches, and progress in localization within China's data center semiconductors.
• Changes in A/H share prices, target prices, and exchange rate assumptions.