From the Source’s Mouth is Fusion Worldwide’s analysis of semiconductor manufacturers’ quarterly earnings call transcripts. This report provides insights into upcoming demand, capacity, and supply trends based on market information directly from the source. The most recent update features the following manufacturers.
This report is updated throughout the quarter. Below are the latest takeaways from Q1 earnings calls, which began on April 18th and run through June 21st, 2024.
Key Takeaways
Despite Weakness in Base Station Business, Qorvo Sees Strong Revenue Growth
Qorvo's latest quarterly report demonstrated significant revenue growth as profits expanded YOY. While demand in some areas—like base station business—remains weak, the company continues to gain traction in other markets such as defense, automotive, and consumer products.
Qorvo's High-Performance Analog (HPA), Automotive Connectivity (ACG), and Consumer Sensing (CSG) segments had the most robust performance. Additionally, the defense and aerospace sector experienced notable growth due to increased demand for defense programs, driven by congressional budget approvals and foreign aid packages. The company also completed its acquisition of Anokiwave, which will further strengthen its defense capabilities.
Regarding inventory management, Qorvo reduced its net inventory balance by $16 million, reflecting efficient inventory control.
Defense and Automotive to Expand As Gross Margins and Revenue Improve
The expectation for Q2 is a significant improvement in gross margins as the company sells through high-cost inventory and continues to improve throughout fiscal '25. Regarding demand trends, Qorvo expects sequential revenue growth in September, with more substantial growth in December due to increased defense spending. While the base station business shows some design wins, the demand environment will remain weak.
In the automotive sector, Qorvo has seen success with its ultra-wideband radar capabilities, securing design wins for secure access in electric vehicles and Wi-Fi 6E solutions for various manufacturers. The industrial and power management sector is also expanding, with design wins in power management for motor controls and power tools.
Overall, the company is optimistic about its growth prospects for the rest of the fiscal year, with a particular focus on improving gross margins and continuing to diversify its market reach.
By the Numbers
Key Takeaways
Wolfspeed Doubles Down on Silicon Carbide and Ramps Production
Wolfspeed continued to ramp its silicon carbide devices for electric vehicles (EVs) in the previous quarter. While its Mohawk Valley facility, which primarily serves EV customers, is progressing well, the industrial and energy (I&E) markets have experienced some challenges due to inventory buildups, particularly in Asia. Wolfspeed's operational focus and discipline enabled it to maintain solid progress despite these headwinds.
Wolfspeed's strategic shift from industrial and energy (I&E) to electric vehicle (EV) applications has proven effective, showcasing the flexibility of its business model. This shift, while impacting short-term gross margins, positions the company well for fiscal 2025, when it expects I&E demand to start recovering. The company's commitment to building inventory to support its Mohawk Valley facility's ramp further underscores its dedication to meeting future demand.
Riding High on Strong EV Design-Ins, Eyes Capacity Expansion
Wolfspeed's strong position in the EV market is evident, with design-ins reaching approximately $2.8 billion in the most recent quarter, the second-highest total in the company's history. Approximately 80% of these design-ins are for EV applications, reflecting the company's robust presence in this sector. Despite industry disruptions, Wolfspeed remains confident in its ability to meet the growing demand for silicon carbide devices, particularly as OEMs adjust and modify their EV production plans.
The company’s investment in the Mohawk Valley and Building 10 manufacturing facilities is on track. It plans to achieve positive EBITDA by the end of fiscal 2025 and operating cash flow breakeven shortly after. The company expects to complete the initial phase of the JP facility by the end of calendar 2024, reducing CapEx by 2025 and allowing for greater flexibility in aligning investments with demand. The U.S. capacity expansions will likely generate strong financial returns, particularly at Mohawk Valley.
By the Numbers
Key Takeaways
AI-Driven Chipsets Propel Smartphones, Automotive, and IoT Demand
Qualcomm's latest earnings call highlighted the expanding adoption of AI in its chipsets, particularly with its Snapdragon platforms. The Neural Processing Unit (NPU) has been the largest area of silicon growth, driven by the increased demand for on-device AI capabilities. This is reflected in premium-tier smartphones, where consumers seek devices capable of advanced AI functionality. The recently launched Snapdragon 8 Gen 3 flagship mobile platform has seen strong global demand, particularly in China, leading to more significant share gains and encouraging an upgrade cycle among consumers. Beyond smartphones, Qualcomm's AI Hub provides developers with a library of pre-optimized AI models, enabling faster inferencing on Snapdragon-powered devices.
Qualcomm's Snapdragon Digital Chassis continues to gain traction in the automotive sector, with a design win pipeline that has grown considerably over the past couple of years. Automotive revenues have increased by 35% YOY, reflecting the increasing content in new vehicle launches.
In the IoT segment, Qualcomm is launching new solutions for the industrial ecosystem, such as the Qualcomm QCC730 micro-power Wi-Fi SoC and the Qualcomm RB3 Gen 2 platform, contributing to the 9% sequential revenue growth.
On-Device AI Demand to Combat Expected Seasonal Slowdowns
Qualcomm is anticipating a continued surge in AI-driven trends, with a projected shift towards higher-priced premium-tier smartphones. This shift is driven by consumer demand for devices capable of running advanced AI models. The upcoming launches of the Snapdragon 8S Gen 3 and Snapdragon 7 Plus Gen 3 platforms in the second half of 2024 are poised to extend these capabilities to a wider range of high-tier devices. This transition towards on-device AI is expected to have a ripple effect on other markets, including PCs and cars. Qualcomm's technology leadership position allows for seamless integration without compromising battery life, further bolstering its competitive edge.
Despite the seasonality of Qualcomm’s business, there is an expected sequential decline due to the absence of flagship handset launches in the upcoming quarter. However, the forecast for the global 3G, 4G, and 5G handset units remains unchanged for the calendar year 2024, with an anticipated growth of high single-digit to low double-digit percentage in 5G handsets. The diversification strategy across automotive, IoT, and PCs will continue to drive growth, with normalization in demand across the IoT customer base exiting fiscal 2024. The launch of Snapdragon-powered AI PCs and ongoing success in automotive and industrial IoT markets will contribute to this trend.
By the Numbers
Key Takeaways
Samsung Profits from Generative AI Surge with High-Value Memory Products
Samsung experienced a surge in demand from generative AI, leading to a shift toward high-value-added products such as HBM and SSDs. This trend improved profitability due to higher ASPs across both DRAM and NAND segments, with both segment's increases exceeding market expectations. Although bit growth for DRAM declined by mid-10% and NAND by a low single digit, the focus on high-value products and qualitative business portfolio improvement turned the memory business to profit for both segments.
Samsung's strategic focus on high-value products, such as HBM and server SSD, has significantly contributed to the shift towards profitability. The company's decision to improve ASPs rather than emphasize bit shipment growth has paid off, leading to a turnaround in the memory business and profitability in both DRAM and NAND.
Generative AI to Continue Driving Demand for Memory
Samsung expects memory demand to remain strong, mainly driven by generative AI. To maintain profitability, the company plans to continue focusing on high-value products, including HBM and high-density DRAM. With most production capacity shifting to HBM, there could be additional supply constraints for advanced processes in DRAM. This shift is due to the concentration of production capacity on HBM, which is leading to a limited supply.
Samsung is proactively preparing to meet the future demand for memory. It expects bit growth for DRAM in the low to mid- to high single-digit range, while NAND's bit growth is projected to be similar to the previous quarter. The company plans to ramp up its 1b-nanometer-based 32-gigabit DDR5 supply and accelerate the production of its industry-first HBM3E 12-high product. These measures are aimed at meeting the rising need for high-density memory products in the AI server market, reaffirming Samsung's commitment to maintaining its market leadership.
The company expects the business cycle to continue improving, with rising ASP trends contributing to profitability. Samsung plans to maintain a similar operational stance to the previous quarter, focusing on meeting actual demand and responding to high-value product needs.
By the Numbers
Key Takeaways
AMD's Revenue Grows with AI, but Embedded Segment Struggles
AMD reported a strong performance in the previous quarter, driven by increasing demand for AI and ML. Revenue grew, reflecting the successful ramp-up of AMD's data center business and the expansion of AI capabilities across its product portfolio. The cloud segment continued its momentum with MI300x production deployments at Microsoft, Meta, and Oracle, powering generative AI training and inferencing. AMD also saw signs of improving demand in the enterprise segment as CIOs required more compute capacity while maintaining physical and power constraints. This trend favored AMD's EPYC processors, which are known for their high core count and energy efficiency.
In the client segment, revenue rose 85% year-over-year, driven by strong demand for Ryzen mobile and desktop processors. Ryzen desktop CPU sales grew by a double-digit percentage, and Ryzen mobile CPU sales nearly doubled year-over-year. The Embedded segment, however, faced challenges with a 46% year-over-year decline due to weaker demand in communication and some industrial and automotive sectors.
AMD Raises Data Center Revenue Forecast, Gaming and Embedded Segments Decline
AMD is poised to capitalize on the AI and ML trends, with continued growth in the data center and AI markets. The company's revenue outlook for data center GPU was increased from $3.5 billion to over $4 billion, indicating strong demand. AMD is also focusing on its AI software stack and hardware roadmap to meet this growing demand, with plans to ramp supply every quarter in 2024.
The client segment is expected to grow, with the launch of next-generation Ryzen mobile processors code-named Strix later in the year. AMD anticipates increased demand for AI PC adoption, with more than 150 independent software vendors (ISVs) on track to develop AMD AI PCs by the end of the year. The company also expects a modest sequential improvement in the second quarter, driven by increased units and average selling prices (ASPs).
However, the Gaming segment will decline by a significant double-digit percentage, partly due to lower inventory levels and reduced demand. The Embedded segment should see a gradual recovery in the second half of the year, with AMD continuing to invest in adaptive SoCs and other products to capture a larger compute market share.
Overall, AMD is optimistic about the sustained growth driven by AI and ML trends, with plans to continue expanding its product portfolio and investing in partnerships to meet the increasing demand for high-performance computing.
By the Numbers
Key Takeaways
Sanmina Capitalizes on AI Demand as Communication Cloud Segment Weakens
Sanmina saw significant growth opportunities from the expansion of AI and ML. These trends were mainly driven by upgrades in cloud networks to meet AI and augmented reality (AR) traffic needs. The Optical Advanced and Packaging segment expanded its optical business for AI applications, focusing on 800-gigabit modules and research and development for 1.6 terabytes. The AI and ML trend has spread across multiple markets, such as automotive, transportation, health care, defense, and aerospace.
Inventory levels were slightly down compared to the previous quarter. This helped increase inventory turns, indicating a slight improvement. However, supply chain constraints and test capacity issues affected the Communication Cloud segment, causing shipment delays. The company expects these issues to resolve during the current quarter, allowing for continued growth.
Sanmina continued to invest in faster-growing and higher-margin end markets, including cloud infrastructure, defense and aerospace, medical, automotive, renewable energy, industrial, and optical advanced packaging. However, the Communications and Cloud segment experienced a 36% year-over-year decline due to inventory adjustments and softer demand in specific segments. The company believes this trend is bottoming out and anticipates improvement in Q3 and Q4.
Cloud Infrastructure Market to Recover Following Supply Chain Constraints
Sanmina expects ongoing growth in cloud infrastructure, AI, and ML to drive new opportunities, particularly in optical advanced packaging and server storage. The company anticipates increased demand in 2025, focusing on high-tech premium circuit boards and integration of server storage.
The Communication Cloud segment's supply chain constraints and test capacity issues will resolve, leading to more stable growth in the coming quarters. Sanmina is optimistic about the market's recovery and anticipates modest sequential improvement in Q3, with a more substantial boost in Q4.
Regarding product diversification, Sanmina continues to focus on defense and aerospace, where demand remains strong, and automotive, concentrating on electric vehicles and electrical charges. The company's strategy to work closely with key customers on new projects and optimize costs will contribute to long-term growth.
By the Numbers
Key Takeaways
Slowing Automotive Demand Offset by Long-Term Opportunities
Q1 brought a notable demand slowdown with incremental softness the automotive sector. Recovery after Lunar New Year was slower-than-expected, leading to reduced linearity in demand throughout the quarter.
Despite the obstacles, the silicon carbide market still holds growth potential, with Onsemi predicting its revenue will expand at twice the market rate in 2024. Inventory digestion persisted across the automotive and industrial markets, but there was some stabilization towards the end of Q1. Overall, the data center and cloud markets have become a stronger focus for Onsemi, as projections over the next five years are robust.
Silicon Carbide and Cloud and Data Center Markets to Drive Growth
Forecasts predict that the second half of 2024 will bring more balanced supply and demand trends, aided by onsemi’s disciplined approach to inventory management. However, this will take some time to materialize in the market. The focus on silicon carbide and cloud and data center markets will drive growth.
Onsemi plans to increase inventory in distribution channels to prepare for new product ramps in the second half of 2024, along with the ramp of its 200-millimeter silicon carbide substrates in 2025. Additionally, stabilizing traditional industrial business should contribute to a more positive outlook for the rest of 2024 and into 2025.
By the Numbers
Key Takeaways.
NXP Adopts Strategic Inventory Management Amid Variable Revenue Trends
In the first quarter of 2024, NXP reported flat YOY revenue. Internal inventory levels increased, as the company maintained tight distribution inventory. NXP’s purposeful strategy to strictly limit distributor inventory allowed manufacturers to redirect products as needed and navigate soft automotive sector demand more efficiently.
Revenue trends across key markets showed variability. Automotive revenue declined due to Tier 1 customers ongoing inventory digestion. NXP observed that industrial and IoT demand trends continued to improve, with growth in China partially offsetting softness in Europe and the Americas.
Consequently, Industrial and IoT revenue showed steady sequential improvement. Mobile revenue experienced similar noteworthy growth, while Communication Infrastructure and other revenue dipped.
NXP Anticipates Inventory Restocking Despite Mixed Forecasts
NXP forecasts a YOY revenue decline but expects QOQ revenue to remain steady. The projected drop in automotive revenue is attributed to ongoing inventory digestion and a weaker macroeconomic environment. Industrial and IoT segments are expected to grow, along with Communication Infrastructure. Mobile will likely to continue its cyclical recovery.
NXP plans to gradually increase channel inventory starting in Q2 as the company expects restocking to begin in the second half of the year, particularly within the automotive and industrial sectors. This approach aligns with expectations for more normalized inventory levels and benefits from new products and partnerships. Notably, NXP's collaboration with Honeywell for AI-enabled industrial-grade applications could contribute to future growth.
Overall, NXP remains cautiously optimistic about demand growth across all segments for the rest of the year.
By the Numbers
Key Takeaways
Automotive and Industrial Market Declines Impact Profitability
STM saw notable declines in automotive and industrial revenue. Industrial’s drop was driven by lower order bookings, suggesting inventory correction is taking longer than anticipated.
Demand for Analog products, MEMs, and sensors dipped amongst automotive customers as original equipment manufacturers (OEMs) adjusted their product mix. The microcontroller segment also faced a substantial 30% drop, particularly in general-purpose microcontrollers, based on shifting industrial demand.
Despite these challenges, STM demonstrated a commitment to innovation. The company launched a new all-in-one tool for MEMS sensor evaluation and development, closely tied to the STM32 microcontroller ecosystem. This initiative aims to support the company's broad portfolio of MEMS sensors and promote the embedding of edge AI in inertial modules. The company's focus on innovation continued with the announcement of a sensorless tire pressure monitoring system for e-bikes, further signaling a growing interest in edge AI solutions.
There were signs of resilience in certain areas. Automotive-focused microcontrollers achieved wins in traction inverters, e-compressor controllers, and smart fuses. The company also noted a stable market environment in personal electronics and received awards for its RF front-end modem solutions from a new player in the EDO satellite market.
STM Plans Strategic Adjustments to Address Industrial Weakness
STM expects the industrial sector's downturn to continue, with recovery likely delayed into the Q3 and Q4. The sharp decline in general-purpose microcontroller demand, which predominantly serves the industrial market, is also projected to continue. Due to these forecasts, STM anticipates substantial pricing pressure on the microcontroller and broader industrial sectors. Product offerings, pricing models, or customer engagement strategies may need to adjust to navigate the downturn.
In contrast, automotive-focused microcontrollers will remain resilient, indicating a potential area for strategic emphasis. The automotive segment's strength, particularly in electric vehicles and hybrid technologies, indicates that will be an important focus sector for the upcoming quarter. Additionally, the success in edge AI applications and ongoing partnerships with Compuware for high-performance telecom and AI server power supplies suggest that STM can leverage these efforts to drive growth.
In conclusion, STM's outlook for the upcoming quarter involves addressing continued industrial weakness and potential pricing pressures while capitalizing on growth opportunities. The company's focus on innovation and strategic collaborations will be essential in the challenging market environment.
By the Numbers
Key Takeaways
Inventory Consumption Pulls Down Revenue While Interesting Trends in AI Develop
Inventory days increased due to proactive purchasing, resulting in more work-in-progress inventory. The automotive sector saw a continued rise in projected sales channel inventory, while IoT experienced a decline. Some markets, especially Japan, showed slower inventory consumption, suggesting it will take longer for these sectors to stabilize.
Data center and infrastructure business grew due to positive trends in AI and DDR5 adoption. AI-related products currently make up a small part of total sales, contributing only single-digit percentages. However, the transition to DDR5 is expected to drive further growth, which is a significant development.
Stabilized Demand with Focus on AI and DDR5 Transitions
Demand will increase slightly between Q2 and Q3. Inventory levels in the automotive and industrial sectors will stabilize while further efforts are required to reduce excess inventory. The focus on AI-related and DDR5 transitions, particularly in data centers, will likely drive future growth.
Regarding foundry and capacity, raw material costs are notably stable, and pricing conditions are gradually returning to normal after the swings caused by the supply crunch during COVID-19. Automotive growth is expected to remain steady over the next four years, with power solutions and silicon carbide technology driving this segment. Production will likely increase in the second quarter to offset anticipated shortfalls due to the summer holidays.
By the Numbers
Key Takeaways
Limited Supply and Wafer-Level Assembly Capacity Cause Challenges
Intel met its Q1 goals and stayed on track for a strong second half of 2024. The rapid growth of the Meteor Lake platform, expected to double in Q2, drove this success. However, assembly capacity at the wafer level created some limitations. Manufacturing supply constraints may continue to limit Intel’s ability to fully meet demand in certain sectors.
The Data Center and AI segment witnessed a surge in demand, propelled by the launch of Gaudi 3 and the anticipated $500M in accelerated revenue in the latter half of the year. Despite a modestly weaker first half, largely attributed to underwhelming general CPU demand, Intel observed a steady rise in interest in its advanced products, including Xeon and Gaudi accelerators.
Growth Forecasted to Continue in the Second Half of 2024
Looking ahead, Intel envisions a robust second half of 2024, with demand propelled by several key factors. An enterprise refresh cycle, in tandem with an expanding PC TAM driven by AI-based PCs, is expected to fuel demand. The data center segment is poised for recovery, with a return to more typical CPU buying patterns, bolstered by the ramping up of accelerator offerings.
In addition, Intel anticipates growth across other segments, including the network and edge businesses, a return to growth for Altera, and a meaningful Gaudi ramp. The foundry business will also contribute to the revenue surge, with consistent profitability and margin improvements into 2025 and beyond.
Overall, Intel's momentum is underpinned by a broader range of products, a rebound in traditional CPU demand, and an increasing adoption of AI technology across various industries. These factors point to a strong trajectory heading into 2025.
By the Numbers
Key Takeaways
Supply Tightness Drives Increased Visibility and Revenue Growth
Last quarter, Western Digital focused on disciplined spending and driving innovation and efficiency to improve supply, which resulted in a tighter market. Limited supply contributed to increased visibility from customers, allowing the company to understand ordering patterns better and plan accordingly. Revenue in all major end markets grew YOY alongside demand, indicating a broad-based recovery.
The sequential revenue increase in HDD was driven by improved nearline demand and higher pricing, with a record-high nearline revenue in the last quarter. This success stems from the company's focus on bringing high-capacity, high-performance drives to market and the restructuring efforts implemented in recent years. These developments and the continued strength of the SanDisk premium brand drove client segment results.
The demand environment in the HDD segment has also benefited from its critical role in AI storage life cycles, particularly in the ingest phase, where HDDs store big data lakes and raw data sets for cost-effectiveness. This role and increased visibility in the HDD market contribute to a cyclical recovery coming off the lows seen in previous quarters.
Regarding other specific product segments, the demand for NVMe SSDs qualified before the downturn returned, with growing interest in higher-capacity points (30-60 terabytes), particularly for AI-related applications. This demand for larger capacity SSDs reflects the company's process of increasing product capacity and employing timely qualification with customers.
AI-Driven Demand and Pricing Strategy Set to Propel Growth
Western Digital expects bit shipments to remain flat for the coming quarter. However, the company expects revenue growth to be driven by increases in Flash ASPs, reflecting a strategic focus on allocating resources to high-value market segments in a tightening supply environment.
Although NAND markets are undersupplied, demand is expected to remain stable. The emphasis on capital discipline remains crucial and the company has delayed business reinvestment initiatives until profitability improves alongside strong long term demand.
The cloud market will continue recovering next quarter, driven by higher nearline demand and better pricing. The AI adoption trend is likely to contribute to this growth, with demand for enterprise SSDs and high-capacity HDDs fueled by large-scale infrastructure developments for AI model training. This cycle of training and inference creates a "virtuous cycle" where models use SSDs for training, and HDDs store the output data.
Western Digital's flash and HDD businesses are separating, a significant development on the horizon. The company is working toward completing the separation in the second half of the calendar year, and it plans to provide further updates as progress is made.
Overall, Western Digital's outlook for the upcoming quarter is cautiously optimistic, with opportunities in both the flash and HDD segments. The recovery in cloud demand, increased enterprise SSD demand, and the critical role of HDDs in AI data storage underscore the company's potential for continued growth. Western Digital aims to navigate this evolving landscape effectively by maintaining capital discipline and focusing on high-value markets.
By the Numbers
Key Takeaways
Silicon Laboratories Sees Inventory Reduction and Demand for AI-Enabled Products
Silicon Laboratories' Q1 revenue exceeded guidance, indicating a rebound from the previous quarter's trough. Both business units (Industrial & Commercial, Home & Life) saw growth. In particular, the company's new Series 2 platform, which includes the xG26 and features embedded AI/ML acceleration, gained demand among industrial customers.
The number of days of inventory in the distribution channel decreased, and the total channel inventory also dropped on a unit basis. Average selling prices (ASPs) were flat QOQ.
Product Launches and Enhanced AI Capabilities to Drive Growth
Forecasts for next quarter indicate continued growth in demand, as both business units project a sequential uptick in revenue. Overall, Silicon Labs is optimistic that its new product launches in the Home & Life and Industrial & Commercial markets will drive revenue.
Additionally, AI/ML capabilities are becoming increasingly crucial in products like the xG26, with applications in Edge processing, machine learning, and energy efficiency. This will only serve to drive more demand for products that are already tracking well.
The company expects continued improvement in demand and excess inventory reduction for customers. The focus is working with distribution partners and customers to bring order patterns within standard lead times. This will improve demand visibility as the market recovers. With better order visibility and a strategic die bank inventory, the company is well-positioned to address market demands as the economy recovers. Furthermore, several key leadership changes are taking place, with a new CFO and SVP of Worldwide Operations to help drive scalability and operational excellence.
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Key Takeaways
Q1 Revenue Declines, but Positive Signs Emerge in 5G and Fiber PON Markets
Q1 revenue declined QOQ due to various factors, including market trends, seasonal fluctuations, and other external factors not provided in MaxLinear’s report. However, despite the decline, 5G wireless infrastructure continues to drive growth within the infrastructure market due to new millimeter wave, microwave, and hybrid backhaul technologies.
The company also saw continued traction with new design wins in the fiber PON market. Additionally, the Wave700 single-chip tri-band Quad MIMO WiFi 7 device is performing well in qualifications. The initial rollout is expected later this year, and adoption will peak in two to three years.
Infrastructure and Connectivity Expected to Grow Despite Market Uncertainty
The revenue guidance range indicated uncertainty in market trends, as revenue could either increase or decrease sequentially based on projections. Within MaxLinear’s specific end markets, broadband revenue will likely decline. Meanwhile, infrastructure, connectivity, and industrial multi-market revenues may increase based on current demand forecasts.
The CRF family of single-chip platforms for 5G Open RAN radio units is gaining positive response, with expected significant revenue expansion over a multiyear cycle. Furthermore, expectations for the fiber PON market indicate that revenue will double based on solid demand over the next two years.
References to various product ramps in storage, Ethernet, and other domains indicate that production and lead times align with expected increases in demand.
2024 Outlook Bolstered by AI Adoption
Expect sequential growth in 2024 due to improving market conditions and new product launches in high-growth markets like optical data center interconnect, 5G wireless, multi-gigabit PON broadband, and WiFi connectivity.
AI adoption for cloud applications is seen as a catalyst for the transition to higher-bandwidth data infrastructure. AI-related design wins are contributing to early-stage revenues, with more significant production expected later in the year. Strong growth is anticipated, driven by AI-related design wins and broader market trends in data-centric infrastructure.
Additionally, there are prospects for significant revenue growth in storage-related products, Ethernet connectivity, and broadband markets over the coming years, with production ramps and customer collaborations signaling a positive trend.
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Key Takeaways
Nearline Cloud Demand Fuel Q1 Revenue Results
Q1 revenue increased thanks to an improved demand environment and an uptick in nearline cloud demand among U.S. and China-based customers. Additionally, nearline cloud demand showed signs of recovery, with sequential improvements in enterprise OEM markets.
Alternatively, the VIA markets had seasonally lower revenue. Smart cities were the one area of strength within this market and the most significant opportunity for VIA products. Regarding other market opportunities, AI continues to drive demand for cost-efficient mass storage, driving strong results for Seagate’s HDD business.
Inventory increased last quarter as part of Seagate’s strategy to support the ongoing mass capacity demand recovery and the ramping of new product lines. The company’s build-to-order initiative allowed for better demand visibility and capacity planning.
Mass Capacity Markets and AI-Related Trends to Drive Q2 Growth
Seagate expects revenue to increase next quarter, with continued demand improvements in mass capacity markets, particularly for nearline cloud products, and moderate improvements in nearline enterprise and VIA markets. Underutilization costs will decrease in the coming quarter and abate by the second half of the year, indicating improved build volume.
The company expects healthy nearline demand growth over the coming quarters and year. Enterprise OEM markets will likely improve once server growth resumes, which correlates with historical trends. AI-generated content will continue to come to market, with larger data sizes from imagery and videos driving demand for HDDs as a cost-effective solution for mass capacity storage. Alongside new product launches, Seagate is dedicated to sustainability within the market, which is why the company’s product circularity program aims to extend the life cycles of products and conserve resources.
By the Numbers
Key Takeaways
Q1 Revenue Declines Due to Weak Demand Across All End Markets
All Texas Instruments (TI) market segments declined, reflecting lower demand in the industrial, automotive, personal electronics, enterprise systems, and communications equipment markets. Communications equipment had the weakest demand trends last quarter. Inventory also increased, both on the manufacturer and customer sides, which contributed to the quarter's lower order volume.
Marginal Decline Expected for Q2, With Gradual Recovery in Key Markets
TI expects revenue to decline once more in Q2, although only marginally. Order volume will likely increase as some of the company’s end markets work through the end of their inventory digestion cycle. While TI generally stays away from forecasting by end market, they did state that personal computing was the first to enter the inventory digestion cycle and will likely be the first to recover. Industrial was later to enter inventory digestion but has steadily worked towards recovery. However, this varies by customer.
For the overall outlook for 2024, the company expects the current environment, with reduced customer inventory levels, to continue impacting revenue. In the long term, TI is investing in its competitive advantages in manufacturing and technology and its broad product portfolio.
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Key Takeaways
TSMC’s Q1 2024 Results Highlight Robust HPC and AI Demand
In Q1 2024, TSMC faced minimal disruptions due to a major-scale earthquake of 7.2 magnitude in Taiwan. The earthquake occurred on April 3rd and temporarily shut down operations. However, the company resumed operations within three days.
Overall, Q1 results were relatively strong, with revenue slightly above guidance. Smartphone seasonality impacted these results but was offset by continued high-performance computing (HPC) application and technology demand.
AI is partially driving the HPC-related demand and will likely continue contributing revenue based on robust 2024 projections. TSMC noted that the forecasted revenue contribution from AI processors will double in 2024, accounting for low-teens percent of total revenue. TSMC expects AI to account for over 20% of its revenue by 2028.
Gradual Recovery with Strong AI and HPC Demand
The semiconductor market, excluding memory, will experience a milder and more gradual recovery throughout the rest of the year, coming off the steep inventory corrections that began in 2023. Macroeconomic and geopolitical uncertainties may persist, potentially impacting consumer sentiment and end-market demand. Foundry industry growth is forecasted to be mid-to high-teens percent, with TSMC anticipating healthy growth throughout the year. Additionally, TSMC noted the smartphone end market is seeing a gradual recovery in demand, while the PC market recovery is slower. Traditional server demand remains slow alongside IoT and consumer market demand.
TSMC expects business to be stronger in the second half of the year than in the first half, driven by increased revenue from 3-nanometer technologies. Profit from 5-nanometer technologies will provide additional support. Continued smartphone seasonality will partially offset these trends.
TSMC is poised to capitalize on AI-related growth opportunities and has noted that the structural demand for energy-efficient computing is accelerating rapidly. AI-related data center demand represents the most robust market trends at the moment. The company’s continued focus is providing advanced technology at scale to support AI innovators and HPC platform growth.
By the Numbers