Weekly News

Contents:

1.?MPI Corporation Revenue Growth Driven by a Surge of AI and HPC Demand.? ?

2. 2024 Q1 Workstation Shipments Down 23% YoY, Recovery Expected in H2.? ?

3. Tesla Begins Construction of Shanghai Megafactory.? ?

4. PepsiCo to expand EV fleet in California with Tesla semis, Ford vans.?

5. Nvidia cuts China prices in Huawei chip fight.? ?

1.?MPI Corporation Revenue Growth Driven by a Surge of AI and HPC Demand.? ?

The semiconductor testing interface and equipment manufacturer of Taiwan, China, MPI Corporation highlighted the robust demand for artificial intelligence (AI) and high-performance computing (HPC). These demands are expected to be the main growth drivers for 2024. To meet this demand, the company plans to expand its probe card production capacity by 30%. It is anticipated that revenue will grow quarter by quarter until the third quarter.

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MPI is a manufacturer of probe cards and testing equipment, with the former contributing to more than half of its revenue. Its vertical probe cards (VPC) and cantilever probe cards (CPC) lead the market share among Taiwanese manufacturers.

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Currently, the overall book-to-bill ratio (B/B Ratio) is roughly 1.3, with CPC around 1.4 and VPC around 1.3. These figures benefit from rush orders and the demand for AI-specific application chips (ASIC).

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The company expects the overall B/B Ratio to remain above 1 until the third quarter. Therefore, 30% of the production expansion of the firm is a plant in response to the demand surge. The monthly production capacity for VPC and MEMS probe cards will uplift from 700,000 and 300,000 pins to 900,000 and 400,000 pins, respectively. CPC capacity is fully utilized, managed mainly through internal adjustments such as shift work to meet urgent orders.

Comment:?

The Chairman of MPI said that the company's MEMS probe cards focus on the high-growth HPC and automotive fields. Its revenue from MEMS probe cards is expected to ramp up over 30% this year. The company will also cater to the demand for application processors (AP) for mobile phones.

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2.?2024 Q1 Workstation Shipments Down 23% YoY, Recovery Expected in H2.? ?

IDC's latest report shows that China's workstation market shipments in the first quarter of 2024 tumbled by 23% year-on-year, totaling 128,000 units. IDC attributes this decline to the weak market and delayed procurement cycles.

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However, the market will be picked up by the demand for workstations in industries such as new energy, high-end manufacturing, and pharmaceuticals for R&D, design, and simulation. IDC expects the workstation market to rebound in the latter half of 2024.

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21.6% of workstation shipments in the small and medium enterprises were concentrated in software and information services, growing by 6.5% year-on-year, which is the key driver of the market, IDC wrote in “China Quarterly PC Market Tracker”. Certain scenarios in internet companies demand high computing power and rendering capabilities, leading to higher requirements for device interfaces and cooling configurations.

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In the large enterprise market, driven by regional policies, the demand for high-end R&D in manufacturing raised the workstation shipments in industrial and other manufacturing sectors from 2.2% in Q1 2023 to 9.1% in Q1 2024, with significant growth in regions like Chongqing in southwest China.

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Additionally, with the increasing procurement needs from higher and vocational education, workstation shipments in the education sector are expected to grow significantly in the second half of 2024.

Comment:

IDC China's analysts believe that not only large enterprises but also some SMEs will have a stronger demand for high-performance productivity tools, driving the demand and performance level of workstation products, with the growth of design industries and the AIGC fields.

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3.?Tesla Begins Construction of Shanghai Megafactory.??

In terms of Tesla's official announcement, its Shanghai Megafactory started construction. This is Tesla's first energy storage superfactory outside the United States and its second major investment project in China after the Shanghai Gigafactory.

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On the same day, Shanghai Lingang Economic Development Co., Ltd. and Tesla signed the first commercial energy storage system Megapack orders in China, totaling eight Megapacks.

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Since 2015, Tesla has launched the home energy storage battery Powerwall and the large commercial energy storage battery Megapack in the US, targeting the home and commercial/industrial energy storage markets.

Comment:

Tesla's energy storage products are available in over 65 countries and regions worldwide. The total installed capacity of Tesla’s storage devices was 14.7 GWh in 2023 and hit a record 4.1 GWh in the first three months of this year. That turns into one of Tesla's fastest-growing businesses.

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4.?PepsiCo to expand EV fleet in California with Tesla semis, Ford vans.??

PepsiCo said on Tuesday it would expand its fleet of electric vehicles in California, deploying 50 Class 8 Tesla Semi trucks and 75 Ford E-Transit electric vans at its facilities in the state over the next several months.

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The 50 Semi trucks to be delivered in the coming months will be received by PepsiCo Beverages North America and used to expand their electric truck fleet in California, operating at the manufacturing and distribution facility in Fresno, California.

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PepsiCo's fleet already includes 21 Tesla Semis. With the additional 50, the total will increase to 71. PepsiCo was one of the first to order 100 Semis when Tesla launched the truck in 2017, and this new delivery will complete most of their order.

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The beverage maker said the move would help "step-change" the electrification of its equipment services fleet across California as it tries to reach its goal of net zero emissions by 2040.

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5.?Nvidia cuts China prices in Huawei chip fight.??

Nvidia's most advanced AI chip it developed for the China market has got off to a weak start, with abundant supply forcing it to be priced below a rival chip from Chinese tech giant Huawei, according to sources familiar with the matter.

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The flattening prices underscore the challenges Nvidia's China business faces amid U.S. sanctions on AI chip exports and heightened competition, casting a cloud over its future in a market that contributed 17% to its revenue for fiscal 2024.

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Nvidia, which dominates the market for artificial intelligence (AI) chips, introduced three chips tailored for China late last year after U.S. sanctions prevented it from exporting its most advanced semiconductors.

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Among those chips, the H20 is the most closely watched as it's the most powerful Nvidia product sold in China, but the three supply chain sources told Reuters there is an abundant supply of the chip in the market, signaling weak demand.

Comment:

Analysts said while Nvidia was trying hard to capture share in a market it cannot afford to lose, the outlook is increasingly uncertain. China's global share of the AI industry is projected to exceed 30% in 2035, according to a report by Chinese market research firm CCID Consulting.

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