Source: Semiconductor Industry Overview
In 2023, the semiconductor industry experienced unprecedented sharp fluctuations, and the rapid changes in the market forced industry giants to be alert at all times to meet the new challenges and opportunities that are constantly emerging. Against this backdrop, the performance of global semiconductor giants has undoubtedly become the focus of the industry's attention.
Can they stay ahead of the fierce market competition? Can we seize market opportunities to achieve rapid growth? Also, can it meet all kinds of challenges and dilemmas? These issues are all affecting the nerves of the semiconductor industry as a whole. Recently, various chip giants have released financial data for Q1 2024, so how are the world's top chip companies performing?
Before that, let's review an overview of these chip giants in 2023.
2023 Top 10 global semiconductor manufacturers
In addition to the poor performance of memory manufacturers in 2023, the ranking of the top 10 semiconductor manufacturers has also changed compared to 2022.
According to the 2023 global semiconductor manufacturer revenue rankings published by market research firm Gartner, Intel's semiconductor revenue in 2023 fell 16.7% year on year to US$48.66 billion, surpassing Samsung for the first time in the past three years to return to the lead.
$Samsung Electronics Co., Ltd. (SSNLF.US)$Dragged down by the memory chip business, semiconductor revenue plummeted 37.5% to US$39.9 billion in 2023, retreating to second place.
$Qualcomm (QCOM.US)$Revenue for 2023 also fell 16.6% to $29 billion, ranking third (same as 2022).
$Broadcom (AVGO.US)$Revenue in 2023 bucked the year-on-year trend and increased by 7.2% to US$25.59 billion, ranking fourth (ranked sixth in 2022).
$NVIDIA (NVDA.US)$Semiconductor revenue in 2023 also surged 56.4% year over year to US$23.98 billion. The ranking quickly rose from 12th place in 2022 to fifth place. This is also the first time in Nvidia's history that it has entered the top five in the world.
SK Hynix was also dragged down by the memory chip business in 2023. Revenue plummeted 32.1% to US$22.76 billion, falling from fourth place in 2022 to sixth place.
$Advanced Micro Devices (AMD.US)$Revenue declined slightly by 5.6% year over year to US$22.31 billion, ranking seventh, the same as in 2022.
$STMicroelectronics (STM.US)$With revenue of US$17.06 billion in 2023, it ranked 8th, up three places compared to 2022.
$Apple (AAPL.US)$The semiconductor business had revenue of US$17.05 billion in 2023, ranking ninth, the same as in 2022.
$Texas Instruments (TXN.US)$With revenue of US$16.54 billion in 2023, it ranked 10th, an increase of two places compared to 2022.
According to Gartner data, the total semiconductor revenue of the top 25 semiconductor manufacturers in 2023 fell by 14.1%, accounting for 74.4% of the overall market, down from 77.2% in 2022.
However, Gartner also pointed out in the report that demand in the memory chip market will show a strong recovery in 2024, and revenue estimates will skyrocket 66.3%. Among them, Flash Memory revenue will skyrocket 49.6%, and DRAM revenue will soar 88%. So, in Q1, which has just come to an end, what kind of report cards will these top semiconductor companies hand over? What kind of new climate will the semiconductor market as a whole show?
Q1 performance, how many are happy and how many are sad
Intel: Strong performance in the client computing division, revenue increased 31% year over year
Despite the complex changes and fierce competition in the global semiconductor market, Intel has achieved steady revenue growth through continuous innovation and product portfolio optimization.
Intel's revenue for the first fiscal quarter of fiscal year 2024 was $12.7 billion, up 9% year over year, mainly due to the strong performance of its client-side computing division. Intel Products (Intel Products) revenue reached $11.9 billion, up 17% year on year. Among them, the rebound in the PC market brought significant growth impetus to Intel. Revenue in this segment reached 7.5 billion US dollars, up 31% year over year compared with 5.8 billion US dollars in the same period last year. This achievement not only reflects Intel's deep accumulation in the PC market, but also shows its ability to respond quickly and adapt in the face of market changes.
Samsung Electronics: Demand for memory chips rebounds, Galaxy S24 smartphone sales are strong
Samsung Electronics' initial operating profit for Q1 2024 was approximately 6.6 trillion won (US$4.9 billion), a year-on-year increase of 931.3%. This figure is 20.5% higher than the average forecast of 5.37 trillion won by analysts at financial data company Yonhap Infomax, and the increase ended Samsung Electronics' continuous quarterly decline beginning in the third quarter of 2022. Samsung's profits rose sharply, mainly due to a rebound in demand for memory chips, improved business in key semiconductor divisions, and strong sales of Galaxy S24 smartphones.
Qualcomm: Strong recovery in the Chinese market, net profit increased 37% year over year
After many consecutive quarters of weakness, chip giant Qualcomm's performance also improved. Qualcomm's performance in the second fiscal quarter of fiscal year 2024 (ending March 24, 2024) far exceeded expectations. Net profit reached US$2,326 billion, up 37% year on year, and revenue of US$9.389 billion, up 1% year on year.
Qualcomm's sharp increase in net profit in the second fiscal quarter was mainly due to a strong recovery in the Chinese market. Qualcomm said that after experiencing a downturn in the smartphone market last year, the Chinese market has begun to recover, and Chinese consumers' demand for high-end devices with integrated AI chatbots has increased significantly. The company's sales to Chinese smartphone manufacturers increased 40% in the first half of the fiscal year, an important sign of market recovery.
Specifically, in terms of business performance, Qualcomm's revenue from the mobile chip business increased 1% year over year to US$6.18 billion, down from the 16% increase in the previous fiscal quarter; revenue from the automotive chip business was US$603 million, up 35% from US$447 million in the same period last year; and revenue from the IoT business was US$1,243 million, down 11% from US$1,390 million in the same period last year. However, both automotive and IoT chip revenue surpassed analysts' expectations.
Broadcom: Significant growth in AI business successfully hedging the decline in traditional business
In the first quarter of the 2024 fiscal year ending February 4, 2024, Broadcom's net revenue increased 34% year over year to US$11.961 billion, up 34% year over year, higher than analysts' forecast of US$11.8 billion. Adjusted net profit was US$5.25 billion, which was also higher than analysts' expectations of US$5.01 billion.
Among the five major businesses under Broadcom's semiconductor solutions, the network equipment business revenue increased 46%, thanks to large-scale customer deployment of AI accelerators. However, other businesses declined across the board due to slowing cyclical demand, with server storage and broadband services falling sharply by 29% and 23%.
Broadcom successfully hedged the decline in traditional businesses such as mobile phones and servers through significant growth in the first quarter of fiscal year 2024 through significant growth in the AI business, and kept the annual revenue forecast of 50 billion US dollars unchanged. Broadcom executives expect that these businesses are experiencing a cyclical bottom, and it is expected that improvements will not occur until the end of the year.
Nvidia: Q1 revenue is expected to be around $24 billion
According to the performance guidelines previously issued by Nvidia, revenue for the first quarter of fiscal year 2025 (2024) is expected to be approximately US$24 billion, fluctuating 2% up and down. Revenue growth has slowed month-on-month, mainly because the game business may have declined month-on-month due to seasonal factors. The data center business is booming and is the main driver of Nvidia's 2024 fiscal year results.
SK Hynix: Memory chips are recovering strongly, and Q1 revenue soared 144.3% year over year
Benefiting from the growth in demand for memory chips driven by AI and the bottoming rebound in memory chip prices, SK Hynix doubled its revenue in the first quarter, and its profit reached the same monthly high in history.
Specifically, SK Hynix's revenue for the first quarter of 2024 was 12.42 trillion won (about 9 billion US dollars), the highest in the same period in history, surging 144.3% from the same period last year, the fastest growth rate since 2010; operating profit reached 2.88 trillion won (about 2.09 billion US dollars), far superior to the market forecast of 1.8 trillion won, and set a record high for the same month. Compared with the loss of 3.4 trillion won in the same period last year, it can be described as a world difference. The operating margin for the first quarter was 23%, the net profit margin was 15%, and the gross margin was 39%, all of which reached recent highs.
AMD: Q1 performance was lackluster, AI chip sales showed no signs of speeding up
AMD's overall performance in Q1 2024 was relatively lackluster, with quarterly revenue of US$5.473 billion, up 2% year over year; net profit was US$123 million, while net loss for the same period last year was US$139 million, equivalent to a year-on-year increase of 188% and a sharp drop of 82% month-on-month; adjusted net profit not in accordance with US GAAP was US$1,013 million, up 4% year on year, and down 19% month over month.
In terms of AMD's performance, although revenue was slightly higher than expected, profits were not ideal, and the market was not too impressed with AMD's performance guidelines for the second quarter of 2024, believing that sales of its AI chips showed no signs of speeding up, which raised concerns. Market disappointment led to a sharp drop in stock prices during after-hours trading.
STMicroelectronics: Revenue declined in the automotive and industrial sectors, underperforming in Q1
ST's Q1 achieved net revenue of US$3.465 billion, a year-on-year decrease of 18.4% and a decrease of 19.1%; gross profit of US$1,444 million, a decrease of 31.6% year-on-year, a decrease of 26%, and a gross profit margin of 41.7%; and net profit of US$513 million, a sharp decrease of 50.9% year-on-year and a decrease of 52.4% month-on-month.
Demand for chips in the automotive industry slowed, causing ST's revenue for the first quarter to fall short of analysts' expectations. The company said that due to weak demand in the automotive industry, it lowered its revenue forecast for the full year 2024 from 15.9 billion to 16.9 billion US dollars to 14 billion to 15 billion US dollars. Furthermore, gross margin is expected to remain at 40%.
For several months now, STMicroelectronics and the chip industry as a whole have been struggling to cope with the slump in consumer electronics demand due to a slowdown in the smartphone and computer markets. In contrast, the automotive semiconductor sector has been stable since the automotive industry has been seeking smaller and more energy efficient chips until now. However, this trend is currently changing.
Jean-Marc Chery, president and CEO of STMicroelectronics, said that net profit and gross profit for the first quarter were lower than the median value within the business forecast range. The main reason was the decline in revenue in the automotive and industrial sectors, but the increase in personal electronics revenue offset this impact. Compared with previous expectations, demand for automotive semiconductors slowed in the first quarter and entered a deceleration phase
Apple: Q1 performance declined slightly, but net revenue and profit both exceeded market expectations
Apple's total Q1 net revenue was US$90.753 billion, down 4% year on year; net profit was US$23.636 billion, down 2% year on year. Apple's Q1 revenue in Greater China was US$16.372 billion, down 8% year over year.
Apple's Q1 revenue from iPhone was US$45.963 billion, down from US$51.334 billion in the same period last year, and failed to meet analysts' previous expectations; revenue from Mac was US$7.451 billion, up from US$7.168 billion in the same period last year, which exceeded analysts' expectations; revenue from iPad was US$5.559 billion, down from US$6.67 billion in the same period last year, and fell short of analysts' expectations; Revenue from wearables, home devices and accessories It was $7.913 billion, down from $8.757 billion in the same period last year, and fell short of analysts' expectations. Revenue from services was US$23.867 billion, an increase compared to US$20.907 billion in the same period last year, exceeding analysts' expectations.
Texas Instruments: The performance of all businesses in Q1 was poor, net revenue and profit both declined, and the market was full of challenges
TI's Q1 revenue this year was $3.66 billion, down 16.4% year over year. Although it was the lowest level in a single quarter since 2020, it was slightly above market expectations of $3.61 billion. Non-GAAP earnings per share were $1.1, which is expected to be $1.08. Net profit was $1.11 billion, down 35% year over year, and is expected to be $983 million.
As the largest manufacturer of analog semiconductors and embedded processors, Texas Instruments has the broadest customer base among chip makers. The customer base spans various industries from space hardware to consumer electronics, and is regarded as a weather vane for economic confidence.
Texas Instruments management said in a conference call that revenue in all markets has declined, with industrial revenue falling by more than a single digit and communication equipment revenue falling 25%. Texas Instruments President and CEO Haviv Ilan emphasized the company's recent challenges, pointing out that revenue in all terminal markets has declined month-on-month and year-over-year. This decline highlights broader market challenges, which may be affected by economic conditions affecting global semiconductor demand.
Texas Instruments said most customers in the company's largest market segment — industrial equipment manufacturers — have completed the inventory removal process. But some companies are still completing this process. Texas Instruments chief financial officer Rafael Lizardi said in an interview that this has led to an uneven recovery in demand.
What changes are taking place in the market?
The storage market is picking up at an accelerated pace
With the gradual recovery of market demand in industries such as mobile phones, PCs, and servers, and the gradual implementation of measures to reduce the production capacity of original storage manufacturers, the prices of some major storage products have bottomed out and are entering an upward channel.
The wave of price increases has accelerated the recovery in the performance of major upstream storage companies.
This sign can also be seen in the performance reports of Samsung and SK Hynix. SK Hynix said that the Q1 results delivered impressive results, mainly benefiting from continued strong AI demand, and the storage market has officially entered a full recovery phase. Among them, SK Hynix is actively expanding production around the HBM required for AI, and announced mass production of a next-generation HBM3E high-bandwidth memory chip in March. SK Hynix has partnered with$Taiwan Semiconductor (TSM.US)$An agreement was signed to cooperate in the production of next-generation high-bandwidth memory HBM4 chips.
In February of this year, SK Hynix Vice President Kim Ki-tae (Kim Ki-tae) said in a blog post that although 2024 has only just started, all of SK Hynix's HBMs have been sold out this year. At the Q1 earnings conference, SK Hynix said it is increasing its supply of cutting-edge HBM3E chips and is in negotiations with some customers on long-term contracts for such semiconductors.
Kim Woohyun, Chief Financial Officer of SK Hynix, said: “With the best technology in the HBM industry, we have entered a clear recovery phase. We remain committed to delivering the best performing products in the industry at the right time and maintaining a profit priority to improve financial performance.”
Samsung also said that in the first quarter of 2024, overall market demand for the storage business was strong, and product prices continued to rise. In particular, demand for DDR5 was stable, and demand for storage related to generative AI was strong. By meeting the demand for high value-added products such as HBM, DDR5, server SSD, and UFS 4.0, the storage business achieved strong growth and recovered profits, while storage products ASP showed an upward trend. In the server storage market, demand for generative AI has remained stable, leading to strong demand for DDR5 and high-density SSDs. The average DRAM and NAND capacity of PCs and mobile devices continues to grow, and we are actively shipping to mobile OEM customers in China, and market demand remains strong.
Furthermore, according to the latest estimated data from TrendForce Jibang Consulting, the quarterly price increase for Q2 DRAM contracts will be revised to 13-18%; the quarterly increase in NAND Flash contract prices will be revised to about 15-20% at the same time. Only eMMC/ UFS prices for all products have a small increase of about 10%.
Consumer electronics chips are recovering
Tech giants such as Intel, Qualcomm, Samsung, AMD, and Apple have all undoubtedly felt the chill of sluggish consumer electronics demand over the past period. However, as time comes to 2024, the consumer electronics market seems to have ushered in a spring breeze, and products represented by smartphones and laptops are gradually breaking out of their trough. According to the latest report released by IDC, in the first quarter of 2024, global smartphone shipments increased 7.8% year over year to 289.4 million units, achieving the third consecutive quarter of growth. The traditional PC market also resumed growth in the first quarter of 2024 after two years of decline. According to the data, global PC shipments in the first quarter of 2024 were 59.8 million units, an increase of 1.5% over the previous year. At the same time, relevant manufacturers also began to show optimism about the performance outlook for Q2, and they all expressed optimism about the Q2 market performance.
Demand for analog and automotive chips still faces challenges
According to reports, as chip prices slowly pick up, the analog IC industry is also beginning to benefit from consumer electronics order demand. At the same time, most customers are expecting the peak season effect of 618 consumer products, so the market is optimistic. The operating performance of simulated ICs in the second quarter will improve markedly, and even manufacturers have already begun to relaunch production. The industry pointed out that most of the express orders this time were due to the restoration of channel inventory, which is similar to the driving IC situation, and generally customers can't clearly see the order demand for the second half of the year, and order visibility is still low. But at least the orders are starting to flow back.
Looking at it now, simulation vendors are still facing great challenges, and full recovery may take until the third quarter.
The statements in the financial reports of Texas Instruments and STMicroelectronics relating to the automotive market segment are not very optimistic. Demand for electric vehicles is slowing down at this stage, and sales are not as good as expected, causing the current inventory backlog in the automotive chip market. Starting around Q3 and Q4 of 2023, there was oversupply in several types of indicative markets. For example, power management chips (PMICs) are mainly concentrated in lower-level processes. As a large number of Chinese foundries enter this market to compete, there is an oversupply; in addition, there is a similar situation with relatively low-level MCU products. He added that chip giant TI has also joined the supply race, leading to an increase in overall market supply.
Currently, the automotive chip market is undergoing a shift from an imbalance between supply and demand to a balance between supply and demand, which represents a huge challenge for automotive semiconductor suppliers. Although the results of various automotive chips in the first quarter of 2024 reflect the short-term challenges currently facing the semiconductor industry, they have not changed the long-term positive trend of the industry.
However, as to when the automobile market will fully recover, Tao Yang, an analyst at the semiconductor business division of Qunzhi Consulting, said that according to the plan, European and American car companies will begin adopting electrified architectures and intelligence-related configuration upgrades around 2026. Demand for automotive chips will increase dramatically. Therefore, it is expected that the overstructured situation of global automotive chips may be mitigated to a certain extent after 2025.
edit/ruby