The metaverse, which requires a massive amount of computing power, is set to benefit global chipmakers— but other tech-related industries could also gain from it, analysts say.
Widely seen as the next generation of the internet, the metaverse refers broadly to a virtual world where humans interact through three-dimensional avatars that can be controlled via virtual reality headsets like Oculus.
Through the metaverse, users can engage in virtual activities such as gaming, virtual concerts, or live sports.
The metaverse drew much attention last year when social networking giant Facebook announced it was changing its name to Meta in October.
Big tech firms will benefit as the technologies related to that virtual world emerge, analysts said.
“The metaverse winners are really the technology companies,” DBS Bank’s Chief Investment Officer Hou Wey Fook.
He said that since the metaverse will require a lot of computing power, therefore a clear beneficiary of it would be semiconductor-making companies.
But according to a report by Morningstar, the chipmakers will not have evenly shared benefits.
“Since many of the tasks that take place in a ‘metaverse’ involve real-time processing of immense amount of data, this will require the chips involved to use advanced process nodes that are only available at TSMC, Samsung, and Intel,” it said.
Smaller foundries like United Microelectronics Corporation, SMIC, and GlobalFoundries, according to Morningstar, may only gain from lower-value elements of the supply chain like power management and display drivers.
Nvidia’s stock climbed 125 percent last year on metaverse optimism. Nvidia is one of four important stocks that CNBC’s Jim Cramer recommends investors buy if they want to bet on the metaverse’s success.
Firms that provide “essential building elements” such as cloud computing, artificial intelligence, and video game graphics, according to private banking firm Lombard Odier in a December report, are other significant areas slated to underpin the metaverse infrastructure that investors should investigate.
Blockchain technology and cryptocurrencies may play a crucial role in such cashless, virtual settings. According to the bank, blockchain-based non-fungible tokens, or NFTs — digital tokens that reflect proof of ownership of assets like art, collectibles, or memes — may create an “interesting” environment for digital content development and monetization.
“These could confer the right to use artworks or own creatures created in the metaverse, opening the door to a new virtual economy. In this realm, human creativity has virtually no limits,” the firm said.
Meta, the parent company of Facebook, is preparing to deploy new hardware and software services for the metaverse, with Apple, Microsoft, and Google.
China is also planning to invest heavily in the metaverse in Asia. Shanghai, the country’s largest city, has included the metaverse in its five-year growth plan. “Encouraging the use of the metaverse in sectors such as public services, commercial offices, social entertainment, industrial manufacture, production safety, and electronic gaming,” according to the plan.
(Adapted from CNBC.com)