After the turmoil of 2023, the semiconductor industry is welcoming a new dawn in 2024 with open arms.
With the latest release of the mid-year reports for 2024, the performance of the major chip manufacturers has become the focus of market attention. According to the list of the top ten global semiconductor companies in 2023 released by the American market research institution Gartner, the top ten companies are: Intel, Samsung, Qualcomm, Broadcom, Nvidia, SK Hynix, AMD, STMicroelectronics, Apple, and Texas Instruments.
This analysis will be based on these companies from the 2023 global chip TOP10 list, and let's take a look at who will stand out in the latest quarter?
01
How did the semiconductor giants fare in Q2?
Since companies such as Intel, Samsung Electronics, and Apple have not disclosed their semiconductor business revenue, the revenue and net profit figures cannot be used for comparison. This article will use each company's net profit and year-on-year growth as the measurement standard.
Among them, Nvidia's quarterly revenue has not yet been announced, and this highly anticipated report will be unveiled in the latter half of this month.According to the Q2 quarterly reports published by various companies, companies showing an upward trend in revenue are mainly divided into two categories. One category benefits from the recovery of the demand for storage chips and a significant increase in prices, such as Samsung and SK Hynix. The other category benefits from the recovery of the consumer electronics market and the vigorous development and application-driven use of AI technology, such as Qualcomm, Broadcom, AMD, and Apple.
Advertisement
Companies with a decline in performance compared to the same period last year include Intel, STMicroelectronics, and Texas Instruments. The reasons for the decline in performance will be analyzed in the following text.
Looking at the Q2 net profit situation, among the listed companies, Broadcom, STMicroelectronics, and Texas Instruments have seen a decline in net profit compared to the same period last year, while Intel has a net profit loss.
02
Different fates for ten companies
Intel's pressure is increasing, with a 15% layoff
Intel recently caused a sensation when it released its latest financial report, mainly because this quarter, Intel's revenue and profits failed to meet market expectations. The main reason for the poor performance is the weak demand for personal computers (PCs) and the strong performance of competitors.
In recent years, AMD and TSMC have undoubtedly put pressure on Intel with their dual progress in technology and the market. AMD has been continuously eroding Intel's market share with the advantages of its Ryzen series processors in terms of performance and price. TSMC's leading position in semiconductor manufacturing processes has made it the preferred foundry for many top technology companies. Intel's total revenue in this quarter only fluctuated by 1%, but due to the ongoing investment period in the foundry industry, Intel is in a loss, with a quarterly operating loss of $2.8 billion in the foundry business.
The unfavorable situation in this quarter has forced Intel to take difficult but necessary measures, including a 15% layoff and a suspension of dividends. The layoff is expected to affect about 17,000 employees, which is also one of Intel's important measures to reduce costs and re-optimize resource allocation. The suspension of dividends is to retain more cash for R&D and investment, in order to regain market competitiveness in the future.Samsung's Operating Profit Soars by 1458.2% This Quarter
Thanks to the increased demand for memory chips and the rise in their prices, Samsung's operating profit has skyrocketed by nearly 15 times year-on-year in this quarter.
Specifically, Samsung Electronics' Q2 revenue grew by 23.42% year-on-year to 74.07 trillion won, slightly better than the market expectation of 73.74 trillion won; the operating profit surged by 1458.2% year-on-year to 10.4 trillion won, exceeding the market expectation of 9.53 trillion won. This is also Samsung's highest operating profit record since the third quarter of 2022.
Looking at the performance of the main business divisions in Q2: The semiconductor business revenue soared by 94% year-on-year, with the memory chip business, Q2 revenue reaching 21.74 trillion won, a 24% increase year-on-year, and a 142% surge quarter-on-quarter.
Qualcomm: Benefiting from the recovery of the smartphone market, revenue returns to double-digit growth
This year's Q2 marks the first time in six quarters that Qualcomm's revenue has returned to double-digit growth.
Qualcomm's revenue mainly comes from the semiconductor division QCT and the patent licensing division QTL. In this fiscal quarter, the QCT division's revenue was $8.069 billion, a 12.48% increase year-on-year; the QTL division's revenue was $1.273 billion, a 3.5% increase year-on-year.
The QCT division contributes the vast majority of Qualcomm's revenue (about 86%), and the smartphone business is the revenue pillar of the QCT division.
The financial report shows that among the various businesses of the QCT division, the smartphone business revenue increased by 12% year-on-year to $5.899 billion, accounting for 73% of the QCT division's revenue and 63% of Qualcomm's total revenue.
Broadcom Mines Gold in the AI WaveBroadcom's business is mainly divided into two major categories: semiconductor solutions and infrastructure software.
In this quarter, Broadcom's semiconductor solutions revenue reached $7.202 billion, a year-on-year increase of 6%, while the infrastructure software revenue was $5.285 billion, a year-on-year increase of 175%, which significantly exceeded market expectations.
Broadcom's CEO, Hock Tan, stated that the revenue from Broadcom's artificial intelligence products in this quarter reached a record $3 billion. He also predicted that the total revenue of Broadcom's artificial intelligence products in the fiscal year 2024 will exceed $11 billion.
As a seller of AI tools, Broadcom is mining AI in various ways. Firstly, Broadcom's switches and routing chips play a key role in AI workloads. Secondly, chip custom technology giants, in order to reduce their dependence on expensive Nvidia chips, have started to choose to build their own artificial intelligence systems, and Broadcom is their partner.
For example, Broadcom has always been the main manufacturer of Google's self-developed AI chip TPU. It is generally believed that Google and Meta are Broadcom's top two customers, and Broadcom has previously announced that the company has already had a third major custom chip customer.
Nvidia's veil is about to be unveiled, has it already ushered in a bubble period?
Since 2024, Nvidia's stock price has continued to rise, once breaking through a market value of 3 trillion US dollars, even surpassing Microsoft and Apple to become the company with the highest market value in the world.
However, in the process of Nvidia's market value soaring continuously, Nvidia's founder and CEO, Huang Renxun, has been continuously selling the company's equity. It is reported that from June 14 to August 2 this year, Nvidia has been reducing holdings almost every trading day, selling 120,000 shares each time.
Huang Renxun is not the only insider selling stocks. In the first half of 2024, the company's executives and directors sold stocks worth more than $700 million, an amount that exceeds any other period in the company's history.
Therefore, some industry insiders also speculate whether AI has already ushered in a bubble period.Opinions in the industry are divided regarding the performance of this year's Q2 results. Some believe that NVIDIA can no longer maintain its previous strong growth momentum, while others believe that NVIDIA's prospects are still bright, with the famous financial services company Morgan Stanley holding a supportive view. So why does Morgan Stanley continue to be optimistic about NVIDIA?
Morgan Stanley believes that the current market concerns about NVIDIA are mainly focused on the excessive capital expenditure in the AI industry, intense industry competition, and other aspects, and these negative impacts will diminish over time. After all, NVIDIA's GPU product advantages are still there.
For example: The demand for NVIDIA's GPU products will gradually shift from Hopper to Blackwell in the future, and during the transition period, the sales volume of H100 and H200 GPU products based on the Hopper architecture remains strong, which can support NVIDIA's revenue; in addition, the enthusiasm of large technology companies for the new Blackwell architecture GPU products continues to rise, making NVIDIA's future revenue prospects brighter.
It is worth noting that according to NVIDIA's previous outlook for the second quarter of the fiscal year 2025: revenue is expected to reach $28 billion, with a fluctuation of 2%. The GAAP and non-GAAP gross margins are expected to be 74.8% and 75.5%, respectively, with a fluctuation of 50 basis points. The annual gross margin is expected to be in the middle of the 70% range.
SK Hynix's revenue and profits have both returned to their peak period.
SK Hynix achieved an operating profit of 8.35 trillion won in the first half of the year, which has already filled the operating loss of 7.73 trillion won for the whole year last year, and both revenue and profits have returned to their peak period.
The growth in performance is mainly due to the increase in ASP, the increase in the high-value product mix, and the favorable exchange rate impact. SK Hynix said that the demand for memory suitable for AI, such as HBM and eSSD, is strong, with HBM sales increasing by more than 80% month-on-month and more than 250% year-on-year, and eSSD sales increasing by about 50% month-on-month. At the same time, the overall price of DRAM and NAND products continues to rise, with revenue increasing by 32% month-on-month. The increase in sales focused on high-end products, coupled with the exchange rate effect, has increased the operating profit margin by 10 percentage points quarter-on-quarter, reaching 33%.
AMD's AI business continues to climb, and the data center business is growing rapidly.
AMD achieved strong business and revenue growth in Q2, mainly due to the record business volume of the data center division. AMD's AI business continues to climb, driven by market demand for the Instinct series, EPYC (Xiaolong), and Ryzen (Ruilong) processors, creating important opportunities for AMD's revenue growth.
Specifically, in this quarter, AMD's data center division achieved a new quarterly high of $2.8 billion, a year-on-year increase of 115%, mainly due to the significant increase in shipments of AMD Instinct GPUs and strong sales growth of the fourth-generation AMD EPYC CPUs. The business volume increased by 21% month-on-month, mainly due to the strong shipment growth of AMD Instinct GPUs.The Client Business Division achieved a turnover of $1.5 billion this quarter, a year-on-year increase of 49%, and a sequential increase of 9%, mainly due to the growth in sales of AMD Ryzen processors.
The Gaming Business Division achieved a turnover of $648 million this quarter, a year-on-year decrease of 59%, and a sequential decrease of 30%, mainly due to the reduction in semi-custom business revenue.
The Embedded Business Division achieved a turnover of $861 million this quarter, a year-on-year decrease of 41%, mainly due to customers continuing to adjust their inventory levels. The turnover increased by 2% sequentially.
STMicroelectronics' performance is sluggish, with industrial and automotive business dragging the rear legs.
For STMicroelectronics, there was not much good news in the first half of the year, and its revenue and net profit both declined year-on-year this quarter.
Jean-Marc Chery, President and CEO of STMicroelectronics, said: "Net revenue in the first half of the year decreased by 21.9% year-on-year, mainly due to the decline in revenue of the microcontroller sub-product department and the power and discrete devices sub-product department. The operating profit margin was 13.8%, and the net profit was $865 million."
In addition, he also said, "Contrary to our previous expectations, the order situation of industrial customers did not improve this quarter, and the demand for automotive products also declined."
Apple's iPhone and Greater China region revenue declined, while software service revenue increased significantly.
Benefiting from the growth of the iPad business and service business, Apple's performance in this quarter achieved a slight increase. The financial report shows:
Apple's iPad business revenue in this quarter increased by 23.7% year-on-year to $7.162 billion; the service business revenue increased by 14.1% year-on-year to $24.213 billion; the iPhone business revenue decreased by 0.94% year-on-year to $39.296 billion; the Mac business revenue increased by 2.4% year-on-year to $7.009 billion.Apple Inc. still faces challenges in the Chinese market. The financial report shows that Apple's revenue in the Chinese market decreased by 6.5% year-on-year to $14.728 billion in Q2. This is also the only region where Apple experienced a decline this quarter, but the decline has narrowed on a quarter-on-quarter basis.
Texas Instruments' revenue has also decreased, which is attributed to the industrial and automotive markets.
Texas Instruments' overall revenue has decreased in this quarter, but the performance of each terminal market is not balanced. Among them, the industrial and automotive markets continued to decline on a quarter-on-quarter basis, while other terminal markets achieved growth.
TI's business is mainly divided into three major parts: analog, embedded processing, and others. In this quarter:
The revenue of the analog department was $2.928 billion, a year-on-year decrease of 11%, and the operating profit was $1.047 billion, a year-on-year decrease of 28%.
The revenue of the embedded processing department was $615 million, a year-on-year decrease of 31%, and the operating profit was $80 million, a year-on-year decrease of 75%.
The revenue of the other departments was $279 million, a year-on-year decrease of 22%, and the operating profit was $121 million, a year-on-year decrease of 37%.
03
In the first half of the year, who is the best promoter?Undoubtedly, the best promoter in the first half of the year belongs to AI.
For example, the soaring performance of the two storage chip giants in the table—Samsung and SK Hynix can be largely attributed to AI.
The demand for storage chips by AI has directly driven the prosperity of the market.
Market research firm Yole Group said that the global storage chip market will surge by 82% in 2024, which will be the largest growth in the history of the semiconductor industry. Among them, DRAM and NAND, the two main types of storage chips, have grown by 88% and 72% respectively. Together, the sales of the global storage chip market have soared from $91.2 billion last year to $166 billion.
In addition, the demand for HBM, a storage product with high bandwidth, high capacity, low latency, and low power consumption, is getting higher and higher. Recently, the three major storage companies have all said that the production capacity of HBM in 2024 has been sold out.
The most intuitive feeling caused by the quantitative change is the recovery of the performance of storage companies. This is not only reflected in the quarterly reports of Samsung and SK Hynix, but also in the performance of the entire industry chain of storage companies in 2024.
The significant increase in Broadcom's performance is also due to AI, such as the increase in demand for Broadcom's switches and routing chips in the AI era mentioned above. Joseph Moore, an analyst at Morgan Stanley, said in a report before the financial report that Broadcom is one of the strongest artificial intelligence companies in the semiconductor industry.
The high growth in shipments of AMD's data center business is also due to AI.
NVIDIA needs no further explanation.
04In the second half of the year, some are delighted while others are worried.
Intel: The second half is full of challenges
Intel CEO Pat Gelsinger said that the trend in the second half will be more challenging than previously expected. Intel is using a new operational model to improve operational and capital efficiency, while accelerating the transformation of IDM 2.0. Coupled with the launch of Intel 18A next year, it will regain its leading position in process technology, strengthen its market position, and improve profitability.
Intel predicts that revenue for the third quarter of 2024 will be between 12.5 billion and 13.5 billion US dollars, with a loss of 0.24 US dollars per share calculated according to GAAP. The forecast also shows the pressure Intel faces in the coming quarters.
Samsung Electronics: The storage market continues to prosper in the second half
Samsung Electronics expects that in the second half of 2024, with major cloud service providers and companies expanding their AI investments, AI servers are expected to occupy a larger market share. In addition, in other business areas, Samsung also said that the overall market demand is in the process of further recovery. Samsung expects an increase in smartphone shipments in the third quarter, while tablet shipments are expected to remain stable on a quarter-on-quarter basis.
Qualcomm: The outlook for next quarter's revenue is optimistic, reducing dependence on the mobile business, and PCs have become the next growth point
Qualcomm expects revenue for the fourth fiscal quarter (third quarter) to be between 9.5 billion and 10.3 billion US dollars, with the mid-point of the forecast range higher than the average analyst expectation of 9.7 billion US dollars. Qualcomm's optimistic outlook for the fourth quarter's revenue further proves that the global smartphone market is recovering from the doldrums.
In the financial report, Qualcomm pointed out that a large part of its revenue comes from a few customers and licensors, especially the high-end mobile devices they sell. Data shows that Qualcomm's revenue from the top three customers accounts for about 49% of the total revenue. However, the dependence on top customers also leads to Qualcomm's low risk resistance.Qualcomm CEO Cristiano Amon said the company is working hard to reduce its dependence on the smartphone market by entering the electric vehicle and PC chip markets.
At the Snapdragon Summit held at the end of last year, Qualcomm released a brand new PC chip - Snapdragon X Elite, which is a PC chip based on Qualcomm's self-developed Oryon CPU.
In April of this year, Qualcomm expanded the Snapdragon X series family of products, and newly released the Snapdragon X Plus. In May of the same year, Microsoft and Qualcomm jointly launched the Copilot+PC equipped with Snapdragon X Elite and Snapdragon X Plus.
For the future AI PC market space, Qualcomm predicts that at least 50% of PCs will have AI capabilities by 2027. Amon said that Qualcomm has cooperated with OEMs to develop the next wave of Copilot+PCs.
Broadcom benefits from AI and bets on AI
Broadcom expects that the company's net revenue for the full fiscal year of 2024 (ending on November 3, 2024) will reach about $51 billion, which exceeds analysts' expectations.
With the increase in global AI data center infrastructure investment, Broadcom's network connection business continues to increase its proportion in AI revenue. The proportion has risen from the previous 20% to 1/3 in Q2. The management expects this figure to reach 40% by the end of 2024. The increase in the proportion of network connection business revenue highlights the importance of network solutions in supporting the operation of AI work and integrating AI accelerators.
In addition to this segment, other businesses are still affected by cyclical factors. The full-year revenue growth guidance for the wireless/server storage/broadband/industrial segments are flat, down 20%, down 36% to 39%, and double-digit decline, respectively.
SK Hynix: Continuing to ride the HBM wave
With the exponential growth of the latest generation of AI technology, the demand for AI servers is strong.Hynix (SK Hynix) expects a low single-digit sequential growth in DRAM bit shipments in the third quarter and will increase shipments of HBM products; NAND bit shipments are expected to decrease by a mid-single-digit on a sequential basis, with eSSD sales increasing, while other products are affected by weak end-market demand and have relatively high inventory levels. With the optimization of product mix and an increase in average selling prices, NAND revenue will continue to grow.
Furthermore, Hynix also stated that with the launch of AI flagship models and foldable smartphones, the demand for general-purpose memory will show a clear upward trend.
AMD: Positive outlook for the data center business in the future
The rapid development of generative artificial intelligence and the development of more powerful models are driving the demand for more computing power in all markets. AMD stated that it is expected to significantly increase revenue in the second half of the year, driven by the data center and client segments.
Looking ahead to the third quarter, AMD expects revenue to be about $6.7 billion (plus or minus $300 million), with a year-over-year growth rate and a sequential growth rate of 16% and 15%, respectively, and a non-GAAP gross margin of about 53.5%.
STMicroelectronics faces challenges in automotive and industrial business
STMicroelectronics stated that the automotive and industrial end markets are currently undergoing profound changes, which also bring opportunities and challenges in the short, medium, and long term.
STMicroelectronics: "The third-quarter business outlook (median) is for net revenue of $3.25 billion, a year-over-year decrease of 26.7%, and a sequential increase of 0.6%; the gross margin is expected to be about 38%, including the impact of an increase of 350 basis points in idle capacity expenses.
For the second half of 2024, based on the current third-quarter and year-end backlog orders and ongoing market dynamics, STMicroelectronics further revised its revenue plan for 2024, now expecting it to be between $13.2 billion and $13.7 billion, with a midpoint year-over-year decrease of about 22%. In this plan, the gross margin is expected to be about 40%.
Apple predicts a 5% increase in revenue for the next quarter, with AI features boosting future sales.Apple also forecasts that the total sales for the current quarter in September will maintain a similar growth level to the just-ended quarter, growing by about 5%, which is higher than the 4% expected by Wall Street. Executives have indicated that services will be a highlight of this quarter, achieving double-digit growth.
Despite somewhat sluggish sales in the Chinese market, Apple is confident about the future and predicts that the upcoming artificial intelligence features will stimulate iPhone upgrades in the coming months, further boosting sales.
Texas Instruments: Market conditions remain unclear, with Q3 revenue expected to achieve sequential growth
Similar to the views of STMicroelectronics, Texas Instruments also faces the burden of revenue from the downturn in the automotive and industrial markets.
When asked about when the chip market will fully recover, Texas Instruments still cannot give a definite prediction.
However, despite the current market environment being full of challenges, Texas Instruments remains optimistic about future business development.
Rafael Lizardi of Texas Instruments said that the current cycle is unusual because the performance of different regions and areas is different. He said that the reason is that electronic product manufacturers need to prepare for the end-of-year shopping season, and the revenue for the third fiscal quarter is expected to grow sequentially.
Texas Instruments' revenue forecast for the third quarter of 2024 is between $3.94 billion and $4.26 billion, with earnings per share expected to be between $1.24 and $1.48.
Regarding the question of which of these top ten semiconductor companies will win the profit crown, many people predict that the answer is NVIDIA. After all, the company's revenue in Q1 of this year grew by 262%, reaching $26 billion; net profit even surged by 628%, reaching $14.881 billion. So can this star company continue to write its legend in the new quarter? We are looking forward to the answer being revealed.
Comments