As the industry navigates through headwinds, a glimpse of optimism emerges in Q3, driven by AI adoption and technological innovation.
In a whirlwind of artificial intelligence (AI)-driven inventory management activities within the supply chain, Q2 was a financial boon for the top 10 global IC (integrated circuits) design powerhouses. With a 12.5% quarterly surge, their combined revenue soared to an impressive US $38.1 billion, revealing the dynamism of the semiconductor industry. At the forefront of this seismic shift is NVIDIA, now officially crowned as the premier IC design house, displacing Qualcomm from its long-standing reign. At the same time, the remaining top players retained their positions.
The company’s success in Q2 can be attributed to the global demand surge from Cloud Service Providers (CSPs), technical giants, and enterprises delving into generative AI and large language models. The data centre segment witnessed a phenomenal 105% revenue boost, driven by a deluge of shipments, including advanced Hopper and Ampere architecture HGX systems and the high-performing InfiniBand. Simultaneously, their gaming and professional visualisation sectors flourished, fueled by captivating product launches. This performance resulted in the company’s Q2 revenue reaching US$11.33 billion, representing a 68.3% surge.
Q2 Financial Challenges for Tech Giants
Qualcomm experienced a challenging Q2 as the Android smartphone sector grappled with reduced demand and pre-purchases by Apple for modems led to a subdued seasonal rhythm. Their revenue dropped by 9.7% to approximately US$7.17 billion. While benefiting from AI-driven demand for high-end switches and routers, Broadcom encountered headwinds with revenue declines in server storage, broadband, and wireless, leading to a Q2 revenue that mirrored the previous quarter at around US$6.9 billion.
AMD’s Q2 performance plateaued at roughly $5.36 billion, hampered by a decline in gaming GPU sales and issues in its embedded segment operations. In contrast, MediaTek experienced a resurgence after several quarters of inventory recalibration, with components like TV SoCs and Wi-Fi stabilising. The urgency of TV orders and escalating shipments for mobile phones, smart platforms, and power management ICs propelled MediaTek’s Q2 revenue to a solid US$3.2 billion. Despite benefiting from AI deployments in data centres, Marvell faced challenges with a decline in enterprise private cloud servers. Weak end-user demand and revenue drops in sectors like data centres, telecom infrastructure, and enterprise networking led to a 1.4% dip in Marvell’s Q2 revenue, reaching approximately $1.33 billion.
Growth Prospects Amidst Semiconductor Challenges
Novatek thrived as customers replenished TV-related inventories and introduced innovative products like OLED DDI. Realtek capitalised on supply chain restocking of PC/NB-centric ICs, reporting quarterly growths of 24.7% and 32.6%, respectively. The absence of substantial signs of a holistic revival in end-sales and inventory restocking poses challenges for growth in H2.In Q3, company inventory levels paint a more optimistic picture than in H1. Nevertheless, a pervasive slump in end-user demand advises caution.
A silver lining emerges with CSPs, internet titans, and private firms increasingly embracing generative AI and large language models. As these high-value AI offerings gain traction, TrendForce anticipates that the top ten global IC design giants will continue their double-digit ascent in Q3, potentially achieving record-breaking figures. The semiconductor industry continues to be driven by technological innovation and evolving market dynamics.
