Intel earnings call reinforces the positive thesis for Greater China cloud semiconductors

Overview

This report uses Intel's 2Q26 earnings call as a starting point to analyze its cross-impact on Greater China cloud semiconductor companies. The core conclusion is that AI compute demand, cloud and enterprise spending, improving x86 server CPU demand, and tight supply together reinforce the positive cycle for cloud semiconductors, which is favorable for covered names such as Aspeed and Montage.

Core views

The report believes Intel's comments indicate demand remains strong: the Data Center and AI business continues to accelerate in both cloud and enterprise, customer design wins and long-term agreements improve visibility, and the server CPU industry is expected to achieve strong double-digit growth this year and next year, extending through 2028. For Greater China cloud semiconductors, strong cloud demand, AI infrastructure expansion, DRAM interface technology migration, and localization of China's data center semiconductors are the main factors supporting the investment case for Aspeed and Montage.

Analysis framework

The report uses an earnings-call cross-validation approach: it infers the beneficiary directions for the Greater China cloud semiconductor supply chain from Intel's comments on customer demand, server CPUs, AI infrastructure, supply bottlenecks, and the custom ASIC business; it also combines valuation models, historical ratings, target prices, and risk scenarios for Aspeed and Montage to form its investment judgment.

Methodology notes

• Valuation methodResidual income model

  Base case residual income model

  The report discloses that it uses a residual income model for the relevant names and lists key assumptions such as cost of equity, medium-term growth rate, terminal growth rate, and payout ratio.

• Industry read-throughCross-reading of the earnings call

  Read-across from INTC earnings call

  Assessing the impact on Greater China cloud semiconductor companies under coverage through Intel's description of demand from cloud, enterprise, AI infrastructure, and server CPUs.

• Rating systemMorgan Stanley relative rating system

  Overweight / Equal-weight / Underweight and Industry View

  Overweight means risk-adjusted total return over the next 12-18 months is expected to be above the average of the analyst's industry coverage universe; Attractive means the industry coverage universe is expected to perform attractively relative to the relevant broad market benchmark.

Asset mapping & comparison

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

• Aspeed Technology (5274.TWO)

  A beneficiary in Greater China cloud semiconductors; the report maintains Overweight

  Strengths

  Benefits from stronger cloud demand, server platform upgrades, and specification migration; target-price history shows a significant increase to NT$20,888 in 2026.

  Weaknesses

  Valuation is sensitive to the sustainability of cloud demand, the pace of specification migration, and the competitive landscape.

  Comparison

  Relative to the industry coverage universe, Morgan Stanley rates it Overweight; the industry view is Attractive.

  Risks

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

• Montage Technology Co Ltd (6809.HK)

  A beneficiary in Greater China cloud semiconductors; the report maintains Overweight

  Strengths

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

  Weaknesses

  The pace of new product launches and DRAM interface migration are key variables.

  Comparison

  Covered alongside A-share 688008.SS under Montage Technology; the report assumes an exchange rate of 1.15 HKD:1 RMB and no discount of H shares relative to A shares.

  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)

  A-share name under coverage; the report maintains Overweight

  Strengths

  Strong positioning in the localization of China's data center semiconductors, benefiting from cloud capex and DRAM interface upgrades; target price Rmb377.

  Weaknesses

  Valuation depends on medium-term growth rate, terminal growth rate, and the realization of localization substitution.

  Comparison

  Covered alongside 6809.HK; the current table price is Rmb233.66, implying relatively high upside.

  Risks

  Cloud demand missing expectations, slower technology migration, delays in new products, and competition and policy disruptions.

• Intel (INTC)

  The source company for the cross-read, not the main recommended name in this report

  Strengths

  Data Center and AI demand is accelerating, customers recognize the role of x86 CPUs in AI infrastructure, and the custom ASIC business run rate is expected to increase from US$2bn to US$4bn.

  Weaknesses

  The main current challenge is expanding supply to meet customer demand.

  Comparison

  Intel's earnings-call comments are used as external validation for judging demand and supply conditions in Greater China cloud semiconductors.

  Risks

  If server CPU demand or supply improvement falls short of expectations, the positive read-through to the supply chain may weaken.

Key data

• Report date2026-07-27The page shows July 27, 2026 06:36 AM GMT.
• Intel custom ASIC business run rateUS$2bn, near-term target US$4bnIntel management said the current run rate of the custom ASIC business is US$2bn and expects it to reach US$4bn before long.
• Server CPU industry growth outlookStrong double-digit growth this year and next year, with momentum continuing through 2028From Intel management's forecast for the global server CPU industry.
• Aspeed target price and current priceTarget price NT$20,888; current price NT$14,730.00Target price history as of 2026-07-23; table price as of 2026-07-24.
• Montage 6809.HK target price and current priceTarget price HK$432; current price HK$332.60Target price history as of 2026-07-16; table price as of 2026-07-24.
• Montage 688008.SS target price and current priceTarget price Rmb377; current price Rmb233.66Target price history as of 2026-07-16; table price as of 2026-07-24.
• Aspeed key valuation assumptionsCost of equity 9.8%; medium-term growth rate 21.4%; terminal growth rate 5.5%; cash payout ratio 85%Base-case residual income model assumptions disclosed in the report.
• Montage key valuation assumptionsCost of equity 8.4%; payout ratio 30%; medium-term growth rate 19.3%; terminal growth rate 4%The assumptions reflect growth in cloud capex, DRAM interface technology migration, and the localization position of China's data center semiconductors.

Impact & implications

For portfolios, the report strengthens the positive view on companies in the cloud semiconductor chain related to server CPUs, AI infrastructure, BMCs, memory interfaces, and localization. If the demand and supply landscape described by Intel materializes, Aspeed and Montage may receive further confirmation of earnings expectations, valuation support, and target-price upside momentum; however, supply bottlenecks, product timing, competition, and the policy environment may still affect the realization path.

Risks

• Cloud demand weakens or is weaker than expected.
• Server CPU and AI infrastructure demand fail to sustain strong double-digit growth.
• Industry supply constraints in wafers, memory, and substrates affect deliveries and revenue recognition.
• Specification migration or DRAM interface technology migration is slower than expected.
• Competition intensifies or the competitive environment is less benign than expected.
• China policy tightens further.
• Delays in Montage new product launches.
• Morgan Stanley has investment banking or other service relationships with multiple covered companies, and investors should pay attention to potential conflict-of-interest disclosures.

What to watch

• Subsequent quarterly progress in Intel's Data Center and AI demand, customer design wins, and long-term agreements.
• Whether demand growth in the global server CPU industry this year, next year, and in 2028 meets the expectation of strong double-digit growth.
• Whether supply constraints in wafers, memory, and substrates ease or worsen.
• Changes in cloud demand, specification migration, and the competitive landscape relevant to Aspeed.
• Montage's DRAM interface technology migration, new product launches, and progress in the localization of China's data centers.
• Whether target prices, ratings, and industry views for Aspeed and Montage are adjusted in subsequent research.