According to Credit Suisse Research analysts Randy Abrams, Jerry Su and Kyna Wong the hardware, semiconductor, telecommunications industries are set to benefit from increasing attention and investment going into the Metaverse.
The Metaverse presents the next generation of the Internet – one that is spatially immersive and viewable in 3D via augmented reality (AR), virtual reality (VR) or regular smart devices, says the research house. The Metaverse is made of five core components – infrastructure, hardware, content, communities and payment mechanisms to offer unique experiences in entertainment, commerce, in addition to hardware and infrastructural needs of the Metaverse.
As Credit Suisse has noted the above five core components of the Metaverse, it expects these sectors to create more opportunities for the Technology, Media and Telecommunications (TMT) ecosystem.
Under the content component, aspects such as gaming or video platform businesses, 3D engines, data-centre-related facilities and integrated hardware are likely to come into high demand with the onset of the Metaverse. This means that online platforms deeply invested in areas such as gaming technology, internet and 3D modelling software stand to benefit most directly from the Metaverse. Advertising agencies and the retail sector dealing with Metaverse commerce also stand to gain as “early movers.”
As part of the wider development of the Metaverse, further investments and improvements to traditional PCs or smartphones alongside the rise of AR/VR stand to provide opportunities for hardware companies. Hence, the analysts expect to see global AR/VR headset sales to hit 42 million units (US$12.6 billion) by 2025, representing a 48% shipment compound annual growth rate (CAGR) and a 36% revenue CAGR.
The semiconductor sector is also primed to benefit since improvements in power in the Metaverse unleash greater data consumption. Moreover, a greater use of silicon for the sector is noted to further its content gains into user hardware, connectivity, storage and cloud computing, according to the analysts. Other notable areas of investment include greater internet connectivity and data with for example, WiFi upgrades from 6 or 7E and increased 5G/6G, and improved cloud infrastructure.
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With regards to hardware, the analysts see potential in AR/VR technologies, printed circuit board (PCB) substrate materials, multilayer ceramic capacitors (MLCCs), batteries and connectors.
In addition, the analysts observe how the Metaverse is able to drive screen traffic and engagement, since video traffic is already 80% of Internet traffic and has been growing at a 30% CAGR. This could drive an additional 37% CAGR over the next decade to 20 times current data usage. Data centres, as a result, will see the need for upgrading with the rise of the Metaverse, alongside fundamental network equipment.
Some risks include fatigue and disconnection from the physical environment as a result of extended periods in the Metaverse, digital security issues especially with the recent onset of NFT fraud/scam cases and existing content policing issues that may prove more difficult for smaller decentralised platforms.
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To that end Credit Suisse is keeping 5G, cloud, Metaverse and EV/auto as its preferred tech themes. The research house likes TSMC, Samsung, Mediatek, Novatek, Win Semi, SEMCO, Luxshare, and ZDT as its top Asia picks to ride on the Metaverse trend.
Photo: Bloomberg
