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The market opportunity for high end custom-design semiconductors used to power artificial intelligence projects is growing faster than J.P. Morgan expected.

On Friday, analyst Harlan Sur increased his market size estimate for ASICs, which stands for application specific integrated circuits, or specially made custom chips. He gave a range, with a bottom of $13 billion to $15 billion and a top of $15 billion to $18 billion.

The “aggressive adoption of generative AI…is driving accelerating demand for custom chip (ASIC) AI compute accelerators,” he wrote.


(ticker: AVGO) and

Marvell Technology

(MRVL) “will be the biggest beneficiaries of this resurgence in custom chip design.”

In Friday trading,


stock was down 1.5%, to $814.45, and

Marvell Technology

shares were off 0.1%, to $57.51.

Generative AI has been a popular investment theme this year. The technology ingests text, images, and videos to create content. OpenAI’s release of ChatGPT late last year sparked interest in this form of AI.

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Sur expects the overall high end ASIC market will grow by 20% annually going forward. According to the analyst, Broadcom is the market leading player with 35% share, followed by Marvell at 12%. Since June, he believes Broadcom has won two or three major new custom chip projects, while Marvell has captured another one or two deals.

“We believe these customer initiatives are continuing to drive strong orders/design activity for both Broadcom and Marvell,” he wrote.

The analyst has an Overweight rating on Marvell stock with a $70 price target. He currently doesn’t have a rating on Broadcom; he dropped coverage after it was announced J.P. Morgan is acting as a financial advisor to


(VMW) in connection with its sale to Broadcom.

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Marvell is scheduled to report its fiscal-second-quarter results next Thursday.

Write to Tae Kim at