Semiconductor Market News (JUl. 22 to JUl. 28)| Consumer Analog IC Demand Improves; AMD Delays Launch of Ryzen 9000 Series CPUs...

01. AI To Drive $1 Trillion In Global Chip Sales By 2030 As Nvidia Leads

Global semiconductor sales are on track to hit $1 trillion as early as 2030, analysts reported at the annual Semicon West trade show in San Francisco earlier this month. Needham & Co’s Charles Shi and Gartner’s Gaurav Gupta agreed, with Gupta pegging the milestone closer to 2031 to 2032.

Gupta also projects double-digit growth for 2024 and 2025, with semiconductor capacity up more than 50% by the end of the decade.

From AI and automotive to the rise of smart spaces and commercial drones, chips will remain in high demand as the forces of autonomy, labor, power, and geopolitics shape what’s to come.

With a gap of one million skilled workers needed to staff the more than 70 foundries expected to go live over the next few years, SEMI’s Christian Gregor Dieseldorf sees the coming labor shortage as a ticking time bomb.

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02.?TI Forecasts Q2 Revenue Above Estimates as Analog Chip Demand Improves

Texas Instruments (TI) has forecasted higher-than-expected revenue for the second quarter of 2024, indicating a potential recovery in demand for its analog semiconductors. ??This optimistic outlook, combined with improving consumer electronics demand, suggests that the prolonged inventory corrections in the analog chip sector might be easing. ??

Consequently, TI's shares increased by 6% in extended trading.?The company expects second-quarter revenue to reach approximately $3.8 billion, surpassing analysts' estimates of $3.77 billion. ??

Analysts note that this positive forecast hints at a possible stabilization or recovery in markets such as industrial automation and automotive. Notably, concerns about a downturn in the automotive sector may not be as severe as previously anticipated. Additionally, global PC shipments grew by around 3% in the first quarter of 2024, marking an end to an eight-quarter decline, according to data from Counterpoint Research. While TI's first-quarter gross profit of $2.01 billion exceeded estimates, it was down from the previous year, largely due to reduced factory loadings.

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03. NXP Semiconductor’s Stock Falls on Weak Outlook

Shares of NXP Semiconductors N.V. fell in late trading after the company's earnings and revenue outlook for the upcoming quarter disappointed investors. For the second quarter ending June 30, NXP reported earnings of $3.20 per share, excluding certain costs like stock compensation, and a revenue of $3.13 billion, a 5% decline from the previous year. These results were in line with Wall Street's expectations of $3.20 earnings per share and slightly higher than the forecasted revenue of $3.12 billion.

However, the company's guidance for the third quarter failed to excite investors. NXP forecasted earnings between $3.21 and $3.63 per share, with the midpoint below Wall Street's target of $3.56. Similarly, its revenue outlook of $3.15 billion to $3.35 billion was lower than the consensus estimate of $3.35 billion. Following the announcement, NXP's stock, which had gained over 5% during the regular trading session, dropped more than 8% in post-market trading.

NXP President and CEO Kurt Sievers stated that the company has successfully navigated the "cyclical trough" and expects sequential growth to resume. Despite the challenging demand environment, he emphasized the company's focus on maintaining resilient profitability and earnings.

NXP's business is distinct from other chipmakers, as it has not significantly benefited from the booming demand for artificial intelligence chips. The company's primary markets include automotive, where it supplies chips for infotainment systems, tire pressure monitoring, and vehicle-to-vehicle communications. In the second quarter, the automotive segment generated $1.73 billion, down 7% year-over-year and 4% sequentially. The Industrial and IoT segment saw a 7% year-over-year and sequential increase, delivering $616 million in sales. The mobile segment reported $345 million in sales, a 21% year-over-year increase, while the communications, infrastructure, and other segments generated $438 million, down 10% from a year earlier and 23% sequentially.

Holger Mueller of Constellation Research Inc. noted that NXP's diverse portfolio has not shielded it from recent industry challenges. While the company's diversification is usually a strength, recent declines in the automotive and mobile segments have offset gains in the industrial, IoT, and communications infrastructure businesses. Mueller emphasized the need for NXP's management to maintain steady performance and seek new growth opportunities.

Stephen Simpson, an analyst from Seeking Alpha, recently expressed concerns about the health of NXP's key markets for the remainder of 2024. He highlighted the slowing auto demand and lower-than-expected EV penetration, suggesting that while NXP could mitigate these issues through strategic wins and inventory management, these areas remain critical to watch.

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04. Samsung Electronics Converts Pyeongtaek Plant 4 to DRAM Production Line

Samsung Electronics has decided to convert its Pyeongtaek Plant 4 (P4) into a dedicated DRAM production line to address the shortage of general-purpose DRAM caused by the supply of HBM. According to Korean media reports, Samsung plans to establish a new P4 production line at the Pyeongtaek plant exclusively for DRAM. P4 is a large-scale, two-story semiconductor facility. Initially, the first floor was intended to be divided between NAND and foundry production lines, but now the plan is to convert it into a dedicated DRAM production line. P4 is already equipped with facilities to produce 10,000 wafers per month of 9th-generation NAND flash memory, but there will be no additional equipment investment. The foundry division has also decided not to make new equipment investments at Pyeongtaek. It is expected that dedicated DRAM equipment will be introduced to P4 starting in the first half of next year.

Industry insiders commented, "Currently, among Samsung Electronics' domestic plants, only P4 has the capacity for expanding new DRAM production," adding, "The plan is to prioritize DRAM investment in locations where semiconductor production capacity can be increased."

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05. AMD May Have Delayed the Ryzen 9000 Launch

AMD has recently disclosed a postponement of several weeks for the launch of its Zen 5-based Ryzen 9000 processors. The delay is attributed to a problem in the "packaged product testing process for the Ryzen 9000 series." A leaked image on BiliBili, which inadvertently reveals a Ryzen processor with an incorrect label, suggests a likely cause for the delay: a trivial one-digit typographical error.

An unauthorized review on BiliBili (courtesy of @995Pro) highlights that AMD's Ryzen 7 9700X is mistakenly labeled as a Ryzen 9 9700X, a clear mistake that necessitates correction. We have verified the mislabeling of the 9700X models and discovered that mislabeled Ryzen 5 9600X units have also reached retail stores, erroneously marked as Ryzen 9 processors.

It is reasonable to surmise that the labeling on AMD's retail packaging might also be affected. Regardless, while this might appear to be a minor issue, AMD would inevitably need to recall all dispatched processors to rectify the incorrect labels.

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06. Samsung’s HBM3 Chips Cleared by Nvidia

Samsung, the world's largest memory chip manufacturer, has finally received certification from Nvidia for its HBM3 chips, albeit with a catch. The approval is limited to the Chinese market, where Samsung's HBM3 chips can be used in Nvidia's AI processor, specifically the less advanced H20 model designed to comply with U.S. export controls. This clearance could enable Samsung to begin supplying these chips to Nvidia as early as August. It remains uncertain if Samsung's HBM3 chips will be utilized in Nvidia's other AI chips or if additional certifications are required.

High bandwidth memory (HBM) chips are crucial for AI processors, offering the necessary speed and capacity. Initially used in 2013, HBM chips have seen a significant increase in demand over the past few years due to the AI market's growth. They are essential for GPUs to perform complex AI tasks, such as those in generative AI.

Currently, only three companies—Micron, Samsung, and SK Hynix—manufacture HBM chips. Nvidia has already certified HBM3 chips from Micron and SK Hynix, but the market is still facing a shortage. Nvidia's certification of Samsung's HBM3 chips is a strategic move to diversify its supply chain. Interestingly, Nvidia's H20 GPU, which is slower than its flagship H100 AI chip for non-China markets, has gained traction due to its competitive pricing against Huawei's AI chip. Additionally, SK Hynix's HBM3E chips have reportedly passed Nvidia's tests and are now in the shipping phase. This development is significant for both Samsung and Nvidia, potentially easing supply constraints and expanding Nvidia's options in the AI chip market.