From the Source's Mouth | Q2 2024

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.

• Diodes Incorporated - August 8th
• Vishay Intertechnology Inc. – August 7th
• Infineon Technologies AG – August 5th
• Intel Corporation – August 1st
• Allegro Microsystems, Inc – August 1st
• Microchip Technology Inc – August 1st
• Monolithic Power Systems Inc. - August 1st
• Samsung Electronics Co., Ltd. – July 31st
• Qualcomm Inc. – July 31st
• Western Digital Co.  – July 31st
• Skyworks Solutions Inc. – July 30th
• Qorvo, Inc. – July 30th
• Advanced Micro Devices, Inc. – July 30th, 2024
• Lattice Semiconductor Co. – July 29th, 2024
• ON Semiconductor Co. – July 29th, 2024
• Sanmina Co. – July 29th, 2024
• MaxLinear Inc. – July 24th, 2024
• Silicon Laboratories Inc. – July 24th, 2024
• STMicroelectronics N.V. – July 25th, 2024
• Renesas Electronics Co. – July 25th, 2024
• Seagate Technology Holdings – July 23rd, 2024
• Texas Instruments – July 23rd, 2024 
• NXP Semiconductors N.V. – July 22nd, 2024 
• Taiwan Semiconductor Manufacturing Co. – July 18th, 2024 

This report is updated throughout the quarter. Below are the latest takeaways from Q2 earnings calls, which began on July 18th and run through September 27th, 2024. 

Diodes Incorporated – August 8th 

Key Takeaways 

• AI Server Demand Led Robust Q2 Results, Contributing to Higher POS Across Computing.
• Automotive and Industrial Market Demand Slowed, Causing QOQ Increase in Inventory Days but Distributor Inventory Levels Improved.
• Diodes Anticipates Strong Revenue Increases Driven by Continued Growth in AI Server Data Centers and Seasonal Demand in the Consumer Market.
• Higher Channel and Internal Inventory Levels Are Expected To Support Urgent Orders and Market Share Expansion. 

Surge in AI Server Boosts Q2 Performance Amid Sluggish Automotive and Industrial Demand 

Diodes' Q2 results exceeded expectations, driven by in demand within the computing market, specifically within AI servers. Despite the automotive and industrial revenue holding steady at 41% of total revenue, recovery in these sectors remains slow due to ongoing inventory adjustments. Inventory rebalancing is expected to continue into Q3.  

AI and Computing to Drive Continued Success in Q3. 

Diodes is expecting strong revenue growth driven by several positive trends. Key growth areas include the computing sector, with AI server data centers leading the way due to design wins and ramping production. The consumer market, particularly smartphones, is expected to peak in Q3, in line with holiday demand. 

Increased inventory levels are helping the company meet urgent orders and capture market share. The automotive sector shows signs of recovery with new program ramps, while AI data centers and communication markets present further opportunities for Diodes' products, including power MOSFETs, timing solutions, and protection devices. 

By the Numbers 

• Q2 Revenue was $319.77M.
• Automotive and Industrial Revenue Represented 41% of Q2 Revenue.
• Diodes Launched 130 New Automotive-Application Products in Q2.
• Consumer, Communications, and Computing Represented 59% of Q2 Revenue.
• By Region, Asia Pacific Accounted for 77% of Q2 Revenue, While Europe was 15% and Americas was 8%.
• Q3 Revenue Estimate is $346.06M, an 8.2% QOQ Increase. 

Vishay Intertechnology Inc. – August 7th 

Key Takeaways 

• Strong Demand for AI Servers in China and Taiwan Helped Offset Declines in the Automotive and Industrial Sectors.
• Improvements in Bookings, Especially in Asia’s Industrial Sector, Indicate Growing Demand for Smart Grid Infrastructure and Factory Automation.
• Automotive Revenue Declined and Industrial Sales Were Flat in Q2, but Design Activity and Supply Agreements in Silicon Carbide Indicate Strong Long Term Trends.
• Vishay is Focusing on AI and Medical Markets to Capture Growth Opportunities. 

Surging Demand for AI Servers in Asia Boosts Vishay's Performance Amid Broader Challenges 

In Q2, Vishay’s revenue remained flat, primarily due to reduced orders from automotive and industrial sectors. This decline was partly offset by increased demand for AI servers in China and Taiwan.  

Despite the dip in automotive sales, design activity persisted, and new supply agreements were established, particularly in silicon carbide technologies. While industrial revenue was flat, there was a notable improvement in bookings late in the quarter, particularly in Asia. This trend is attributed to mounting demand for smart grid infrastructure and factory automation solutions. 

In the aerospace and defense sectors, revenue declined despite strong demand for specific aircraft devices. Ongoing efforts to finalize supply agreements are expected to bolster future revenues once these discussions are completed. 

Medical revenue increased QOQ due to high custom magnetics sales. The telecom, computing, and consumer markets experienced declines both QOQ and YOY. However, growth was noted in AI server and notebook orders, particularly in Asia. 

OEM revenue decreased on both a QOQ and YOY basis due to lower volumes, while EMS and distribution revenue saw sequential gains. Regionally, revenue in the Americas rose slightly, driven by the distribution and medical sectors.  

Inventory Rebalancing and Rising Demand Propel Vishay Forward 

Vishay is beginning to see inventory rebalancing, especially in the automotive and industrial sectors, with improved bookings signaling potential growth. Demand for semiconductors, driven by AI servers and vehicle computing, is on the rise, supporting a revenue increase in Q3. 

While global distribution inventory has decreased, Asia, particularly China’s EV sector, shows strong demand, contrasting with weaker performance in Europe and the Americas. Vishay expects inventory corrections for passive components to stabilize in Q3, with semiconductor adjustments possibly extending into Q4 or Q1 2025. 

Looking ahead, Vishay anticipates flat growth in the automotive sector in Q3 but sees potential revenue growth in Q4 2024 and beyond. The company is also focusing on growth in industrial automation, smart grid applications, and the medical market, with a positive outlook in AI server technology. 

Despite reducing its 2024 CapEx forecast, Vishay remains committed to long-term investments, especially in expanding MOSFET and semiconductor production in 2025. 

By the Numbers 

• Q2 Revenue was $741.24M.
• Automotive Revenue Decreased 6.7% QOQ and 13.6% YOY.
• Telecom, Computing, and Consumer Markets Saw a 2.3% Decline QOQ and a 37.3% Drop YOY.
• Aerospace and Defense Revenue Fell 3.3% QOQ but Increased 17.2% YOY.
• OEM Revenue Fell by 11.1% Sequentially and 19.1% YOY.
• EMS Revenue Increased by 1% QOQ but Was Down 15.9% YOY.
• Revenue in the Americas Rose Slightly by 1%, Driven by Distribution and Medical Sectors.
• Medical Revenue Increased 14.7% QOQ.
• Q3 Revenue Estimate is $747.88M. 

Infineon Technologies AG – August 5th 

Key Takeaways 

• Inventories Remain Elevated but There Are Signs of Potential Stabilization as Market Segments Pass the Worst of the Inventory Correction Phase.
• Infineon Is Advancing It’s Supply Capabilities and AI Power Business With Launch of Kulim 3 Factory for Silicon Carbide Devices.
• Smartphones Show Signs of Cyclical Recovery, Automotive and Industrial Continue to Experience Weak Demand.
• Despite Current Challenges, Renewables (Photovoltaic and Wind Power), AI and Edge AI Show Strong Growth Potential. 

Infineon Reports Incremental Gains as Market Recovery Shows Uneven Patterns 

Infineon saw a slight increase in sales and earnings, thanks to seasonal factors and signs of the market bottoming. While inventory levels are still high, the worst of the correction appears to be over. 

Recovery is uneven across markets. Smartphones are seeing cyclical growth, while parts of industrial and established automotive sectors face weaker demand. However, positive momentum continued in renewables, AI, and edge AI. 

The automotive division reported modest gains, driven by strong demand for microcontrollers, even with ongoing inventory adjustments. The Green Industrial Power segment remained stable, with expectations for strong growth in renewables like solar and wind power. Power & Sensor Systems marked a turning point with a revenue increase after six quarters of decline, with future growth expected from improvements in power density and efficiency. 

Connected Secure Systems stayed stable, with a focus on developing edge AI solutions for industrial and consumer markets. Infineon is also seeing acceleration in its AI power business, driven by new vertical power delivery solutions. 

Infineon Eyes Robust AI Power Sector Gains While Automotive and Green Industrial Power Lag Infineon expects Q3 revenue to increase, following typical seasonal trends, with all divisions contributing. Power & Sensor Systems will lead this growth, while Automotive and Green Industrial Power will grow at a slower pace. 

The company is in a transition phase with improving market conditions but no full recovery yet. Infineon’s outlook for the full 2024 fiscal year remains stable, with significant growth expected in its AI power business, potentially doubling next year. The upcoming Kulim 3 facility will boost Infineon’s position in the silicon carbide power device market. 

Continued growth is anticipated in the automotive sector, driven by advancements in e-mobility and power systems, with strong demand in China and benefits from stricter EU emission targets. The Green Industrial Power segment is expected to remain stable, with future demand driven by renewables like photovoltaic and wind power. Infineon is also expanding its silicon carbide capabilities and scaling up its AI power business, while exploring new applications in edge AI and high-performance computing. 

By the Numbers 

• Q2 Revenue was $4.06B.
• Photovoltaic Installations Growing by 24% in 2024.
• Power & Sensor Systems Revenues Increased by Five Percent QOQ.
• ATV Is Expected To Grow by About Three Percent YOY.
• GIP, PSS, and CCS Project to Decline in the Low Teens, High Teens, and Mid-20s, Respectively.
• Revenue Estimate for Q3 is $4.36B. 

Intel Corporation – August 1st 

Key Takeaways 

• Intel Is Reducing Capex and Cutting Over 15% of Its Headcount by the End of 2025 To Streamline Operations.
• Weak Consumer and Enterprise Spending in China Has Lowered Intel’s 2024 Total Addressable Market (Tam) Expectations.
• The Transition of Intel 4 and Intel 3 Wafer Production to Ireland Increased Near-Term Costs but Is Expected To Improve Long-Term Margins.
• Q4 Is Expected To Improve With Better Inventory Levels and an Ongoing Enterprise Refresh Cycle. 

Intel Foundry Reports Growth in Advanced Packaging Despite Rising Losses 

Intel's cyclical businesses faced challenges, leading to weaker-than-expected margins and earnings. The ramp-up of Intel’s AI PC products, which involved transitioning wafer production to Ireland, pressured margins in the short term but is expected to result in long-term cost savings and margin improvements as the facility scales up. The company also faced additional challenges, including charges related to unused capacity and competitive pricing. 

Intel Foundry's Q2 revenue saw a slight decrease sequentially, but increased YOY, driven by higher wafer volumes in advanced nodes. However, the Foundry's operating losses widened, with further losses expected next quarter due to the high costs associated with older production methods and R&D expenses. Despite these challenges, there are positive signs in certain aspects of Foundry Services, such as advanced packaging. 

Mobileye's revenue increased, signaling the end of excess inventory issues. Alternatively, Altera's revenue was strained by ongoing inventory adjustments, but growth is expected later in the year as buying patterns normalize. The Network and Edge (NEX) business had stable revenue, though profitability was affected by the rapid ramp-up of AI CPUs. 

Intel remains focused on regaining process leadership with its aggressive strategy for advancing its technology nodes. The company is progressing with advanced microprocessor development, which is now operational and performing well. 

Intel Navigates Slower Growth with Strategic Investments and Operational Efficiency 

Intel anticipates growth for the remainder of the year, though at a slower pace than initially expected. In Q3, results will be impacted by modest inventory adjustments in the Client Computing Group (CCG) and Data Center and AI (DCAI) segments, along with weaker performance in cyclical businesses like NEX, Altera, and Mobileye. However, Intel expects stronger seasonal growth in Q4 as client inventory levels improve. 

Weaker spending in China and a focus on AI server investments have elevated customer inventories, lowering Intel's market expectations for 2024. Despite below-seasonal growth in Q3, healthier inventories and ongoing enterprise upgrades are expected to drive stronger growth in Q4. Mobileye has adjusted its revenue outlook downward due to challenges in China affecting Western automotive suppliers. 

Intel is heavily investing in its AI PC category to secure its market leadership, despite short-term margin pressures. The company plans to introduce its first client CPU on the Intel 18A process in the second half of 2025, aiming for better performance and cost-competitiveness. To cut costs, Intel is reducing headcount and capital expenditures, reflecting softer demand expectations. 

Product development is progressing well, with new server products and AI PCs showing strong demand. Intel’s advanced packaging technology is gaining traction, supported by key industry partners, and the company is preparing for upcoming product launches that will enhance its market position. 

Intel is also preparing Altera for operational separation, with plans for a future IPO. 

By the Numbers 

• Q2 Revenue was $12.83B.
• Mobileye Revenue was $440M, Up 84% QOQ.
• Altera Revenue Was $361M, Up 6% QOQ.
• NEX Business Delivered 10% YOY Growth in First Half of the Year.
• Q2 Operating Profit for Intel Products Was $2.9B, 25% of Revenue and up Approximately $400M YOY.
• The AI PC Will Grow From Less Than 10% of the Market Today to Greater Than 50% in 2026.
• Q3 Revenue Estimate $13.07B. 

Allegro Microsystems, Inc – August 1st  

Key Takeaways 

• Allegro Reduced Inventory in Direct and Distribution Channels, With DSO Improving to 35 Days.
• Allegro Introduced New Products for Clean Energy, Automotive, and Industrial Automation Applications.
• Inventory Rebalancing and High Interest Rates Have Resulted in a Muted Outlook for Industrial Sales, With Recovery Anticipated To Continue Into Fiscal Year 2026.
• Allegro Expects a Recovery in the Automotive Sector and Remains Bullish on EVs. 

Inventory Management and Production Innovation Advance Amidst Market Challenges 

Allegro Microsystems made notable progress last quarter by reducing inventory across direct and distribution channels, though inventory levels increased slightly, particularly in wafer form. The company improved its days sales outstanding (DSO) but still faces high inventory levels.  

In particular, Allegro successfully reduced automotive channel inventory, especially in China and North America. The company also launched new products, including solutions for clean energy and industrial automation, and strengthened its position in magnetic sensing, securing key design wins. 

Allegro Anticipates Recovery, With Focus on Automotive and E-Mobility Market 

Allegro anticipates a rebound in the automotive sector, expecting a return to normal ordering patterns and modest sales growth next quarter. While the industrial and consumer markets remain subdued, Allegro is optimistic about continued growth in electric vehicles (xEVs) and plans to expand its 48-volt product offerings. The company is well-positioned to benefit from the Chinese market, where inventory corrections have been successful, and sees positive prospects as Chinese OEMs diversify manufacturing locations. Despite a cautious outlook for industrial sales, Allegro expects recovery to extend into fiscal year 2026. 

By the Numbers 

• Q2 Revenue was $166.92M.
• Revenue Estimate for Q3 is $187.02M. 

Microchip Technology Inc – August 1st 

Key Takeaways 

• Inventory Correction Remains a Headwind, Causing Microchip to See a Sharper Revenue Decline Compared to Competition.
• Inventory Increased to 237 Days Due To Lower Sequential Revenue and Continued Investment in High-Margin, Long-Lived Products.
• Industrial and Automotive Markets in Europe and the Americas Continue to Struggle Due To Macroeconomic Challenges.
• Microchip Expects Modest Inventory Growth and Stable Production in Q3, With Lower Utilization and Capital Investment Through Fiscal 2025. 

Microchip Faces Challenges with Excess Supply and Regional Market Variability 

Microchip has navigated a complex semiconductor cycle that began with pandemic-driven disruptions and evolved into severe product shortages and supply chain issues. This led to a significant inventory correction, with Microchip experiencing a sharper revenue decline compared to some competitors due to differences in market exposure and inventory strategies. 

Inventory levels remain a key focus, with a recent increase driven by lower revenue and continued investment in high-margin, long-lasting products. The industrial and automotive markets in Europe and the Americas have been particularly weak, influenced by high interest rates, short lead times, and an uncertain business outlook. Customers are cautious, managing inventory conservatively due to working capital constraints. However, there are signs of recovery, especially in China, which has performed better than other regions. 

Microchip Prepares for Next Growth Phase, Driven by Inventory Management and MCU Market Expansion 

Looking ahead, Microchip expects cautious growth, with inventory management remaining a priority. The company is keeping production levels stable while pausing capacity expansion to control inventory. This conservative approach will extend into the next fiscal year. 

In product development, Microchip has expanded into the 64-bit embedded microprocessor market, targeting high-performance applications like AI-enabled edge solutions. This expansion builds on its existing 32-bit portfolio, significantly broadening its market reach and opening up new opportunities in areas like factory automation and machine vision. This strategic move is expected to nearly double the company’s market potential. 

By the Numbers 

• Q2 Revenue was $1.24B.
• Revenue Estimate for Q3 is $1.15B. 

Monolithic Power Systems Inc. (MPS) – August 1st 

Key Takeaways 

• Improved Order Trends and Rising AI Demand Led MPS To Exceed Revenue Guidance in Q2.
• Storage, Computing, and Communications Will Be the Primary Growth Drivers in Q3, With Increased Investment in Wireless and 5G on the Horizon.
• The Industrial Segment, While Currently Modest and Slow-Growing, Will Present New Opportunities Within the Next Four Quarters.
• Automotive and EV Market Outlooks Remain Uncertain Over the Next Few Quarters. 

Improved Bookings and AI Demand Boost Q2 Revenue 

MPS achieved strong revenue growth in Q2 2024, exceeding expectations due to rising demand for AI power solutions, better order trends across various markets, and initial contributions from past design wins. Bookings have improved across multiple sectors, with significant growth in communications, storage, and computing, particularly for high-power needs in communications. However, despite expectations, the automotive sector's recovery was slower than anticipated. 

MPS is also expanding its global supply chain to support future growth, underscoring its shift from a chip supplier to a full solutions provider. 

Storage, Computing, and Communications Expected to See Significant Growth 

While the automotive and EV markets remain uncertain in the near term, MPS continues to see growth across all end markets, especially in areas with longer design cycles. Storage, computing, and communications are expected to drive significant growth in Q3, with early signs of increased investment in wireless and 5G within the communications sector. 

Although the industrial segment has shown limited growth, it will offer new opportunities in the coming quarters. MPS's leadership in vertical power delivery positions the company well for continued expansion, even as enterprise data growth slows compared to recent trends. 

By the Numbers 

• Q2 Revenue Totaled $507.4M.
• MPS Solutions Reportedly Accounts for 20% - 25% of MPS Revenue.
• Q3 Revenue Estimate is $599.94M. 

Samsung Electronics Co., Ltd. – July 31st 

Key Takeaways 

• Q2 Trends Indicate Continued Growth in AI Server Applications, Driving Demand for High-Performance Memory Components.
• Gen5 SSD Production and Upcoming Mass Production Of 64-Terabyte and 128-Terabyte SSDs Indicate Robust Respond to Rising Demand for SSDs in Generative AI Models.
• Samsung’s Focus on OLED Production for Gaming Monitors and B2B Markets Shows Increased Demand for High-Quality Display Components.
• Despite Challenges Like a Strike and Cost Pressures, Samsung Has Kept Its Supply Chain Running Smoothly Through External Audits and Continuous Production. 

Samsung Q2 Results Highlight AI-Focused Memory, OLED Success, and Strategic Investments 

In Q2, Samsung saw strong performance in key areas despite slower market activity. The Memory segment excelled due to high demand for AI-related products like High Bandwidth Memory (HBM) and DDR5, and increased average selling prices. Samsung also made significant progress in HBM3 production, solidifying its position as a market leader. 

The server SSD market grew substantially, driven by the rising need for high-performance storage for generative AI. Samsung expanded its Gen5 SSD production to meet this demand, contributing to revenue growth. 

The OLED segment thrived, reinforcing Samsung’s premium market position. However, the smartphone division faced a revenue decline due to seasonal weakness, though overall shipments exceeded expectations due to improved consumer sentiment and disposable income. 

Samsung to Leverage AI, HBM, and Advanced Technologies in Q3 

Looking ahead to the second half of 2024, Samsung expects continued strong demand for AI servers, especially those using HBM and DDR5. The company is managing its supply chain effectively and anticipates no disruptions despite ongoing challenges from the current worker strike. 

Samsung plans to maintain profitability by focusing on expanding its HBM business. The company expects a significant increase in HBM revenue and is preparing to ramp up production. 

In the server SSD market, Samsung forecasts substantial revenue growth driven by the demand for high-density storage. The company is preparing to produce larger SSDs and anticipates strong growth in its Foundry business, with advancements in 3-nanometer technology and plans for future developments in mobile, automotive, and consumer applications. 

The smartphone market is expected to grow with increased demand for premium devices, and Samsung is focusing on hardware upgrades and AI enhancements. In the TV segment, demand is anticipated to recover, driven by global events and new model launches. 

Samsung will continue to innovate in OLED technology, aiming to expand into high-end IT markets. The company is investing in production capabilities to support this growth, especially in gaming monitors. 

By the Numbers 

• Q2 Revenue Totaled $53.65B.
• The DS Division Experienced 23% Revenue Growth.
• Displays Revenue Increased by 42%.
• MX Division’s Revenue Decreased By 19%.
• HBM Sales Increased by About 50% and Server DDR5 Sales Increased by Around 80%.
• Server SSD Sales Revenue Increased by About 40%.
• DDI Sales Increased Over 40% YOY.
• Q3 Revenue Estimate is $61.72B. 

Qualcomm Inc. – July 31st 

Key Takeaways 

• Handset Revenue Met Expectations Thanks to a Notable Increase from Chinese OEMs.
• The Launch of Copilot+ PCs Powered by Snapdragon X Series Represents a Major Advancement in Personal Computing.
• Qualcomm Anticipates Sequential Revenue Increases in IoT and Modest Gains in Handsets.
• Major Snapdragon X Series Launch to Drive Demand Across Automotive and Computing Sectors. 

Qualcomm Sees Growth in Automotive, XR, and Computing 

Qualcomm has seen notable growth in its automotive, IoT, and computing segments. The company's diversification strategy is paying off, particularly with its Snapdragon mobile platforms. 

In automotive, Qualcomm’s efforts have resulted in significant new design wins, enhancing its Digital Chassis offerings and strengthening its role in digital cockpit and ADAS technologies. This has led to record revenue in the automotive sector. 

The IoT market is gradually recovering, contributing to sequential revenue growth. Handset revenue met expectations, and there was substantial growth from Chinese OEMs. 

In computing, Qualcomm introduced the Copilot+ PCs with Snapdragon X Series, which are performing well, with some models already selling out. The XR segment also saw strong growth, driven by successful products like Meta's Ray-Ban smart glasses and increasing demand for mixed reality devices. 

Qualcomm Eyes Expansion in IoT, Automotive, and AI Amidst Strategic Launches 

Looking ahead, Qualcomm anticipates continued growth in IoT, automotive, and AI. Handset revenue is expected to grow modestly, while IoT revenues are projected to see more significant growth due to advancements in various applications. 

Automotive revenue may remain stable in the short term but is expected to rise significantly over the fiscal year. Qualcomm plans to leverage on-device AI to enhance its competitive edge in industrial, networking, automotive, and XR markets. 

In the PC sector, Qualcomm will soon launch its Snapdragon X Series, aiming to cater to different price points and drive the shift to ARM-compatible architecture. The company is positioned to become a key player in AI-enabled PCs by 2027. 

Overall, Qualcomm is focusing on innovation and market expansion, setting the stage for continued success across multiple technology areas. 

By the Numbers 

• Q2 Earnings Totaled $9.39B.
• Q2 Chipset Revenue Was $8.1B.
• Licensing Business Revenue Was $1.3B.
• QLT Revenue Was $1.3B.
• QCT Handset Revenue was $5.9B, Reflecting Over 50% YOY Revenue Growth From Chinese OEMs.
• QCT IoT Revenues Increased 9% Sequentially to $1.4B.
• Delivered Fourth Consecutive Quarter of Record QCT Automotive Revenues of $811M, With QOQ Growth of 34%.
• Revenue Estimates for Q3 Are $9.85B. 

Western Digital Co. (WD) – July 31st 

Key Takeaways 

• Significant Gains in the Cloud and HDD Segments Drove a QOQ and YOY Increase in Revenue.
• Favorable Price Increases and Higher Shipments in the Cloud, HDD, and Enterprise SSD Segments Boosted Results.
• Bit Shipments Declined for Flash, But Revenue Still Increased Modestly Thanks to Cost Efficiency Strategies.
• The AI Data Cycle Is Expected To Fuel HDD Demand, Positioning the Company for Continued Momentum in Both Flash and HDD Markets. 

Cloud and HDD Segments Propel Western Digital Revenue 

Western Digital had a strong quarter, driven by growth in its Cloud and HDD segments. Cloud revenue surged due to record bit shipments and favorable pricing, contributing significantly to the company's profits. The HDD segment also saw increased demand and pricing, which boosted overall revenue. Flash revenue grew as well, though at a slower pace due to reduced bit shipments. 

The company's focus on cost reduction, efficient manufacturing, and leadership in SMR technology helped improve gross margins and profitability across its business segments. 

AI and Enterprise SSDs Lead Future Growth Trends 

Western Digital expects strong growth in enterprise SSDs, supported by high demand and favorable pricing. Despite challenges in consumer markets, the company's innovative product mix is anticipated to drive revenue and margin expansion, particularly in mobile and gaming sectors. 

The rising need for data storage driven by AI and increased data cycles will likely boost HDD demand. With a strategic focus on managing supply and capital effectively, Western Digital is well-positioned for sustained growth. 

Overall, the outlook remains positive, with continued momentum in both Flash and HDD markets. 

By the Numbers 

• Q2 Revenue was $3.8B, Up 9% QOQ and 41% YOY.
• Cloud Revenue Increased 89% YOY.
• WD’s HDD Segment Increased 14% QOQ.
• Q3 Revenue Estimate is $4.11B. 

Skyworks Solutions Inc. – July 30th 

Key Takeaways 

• Q2 Revenue Slightly Exceeded Guidance, With Broad Markets Showing Two Consecutive Quarters of Growth Since December 2023.
• Signs of Inventory and Order Normalization Are Emerging in the Mobile Sector, QOQ Growth Forecasted To Continue.
• Skyworks Is Preparing for a Significant Upgrade Cycle Driven by AI in Mobile, IoT, and Robotics.
• While Inventory Corrections Are Largely Complete in Consumer and Enterprise Data Centers, Excess Inventory in Automotive and Industrial Markets Is Delaying Recovery. 

Broad Markets Continue to Improve Alongside Ongoing Inventory Adjustments 

Skyworks has seen steady revenue growth over the past two quarters, following a low point in late 2023. This trend is expected to continue modestly for the rest of the year. In the mobile sector, there are positive signs of inventory and order normalization. The edge IoT market is also improving, with strong prospects for WiFi 7 systems, which promise better data transfer speeds and lower latency. 

Inventory issues are mostly resolved in data centers and wireless infrastructure, but excess inventory still affects automotive and industrial markets. Recovery in these areas will be gradual, but the mobile sector is showing signs of improvement, particularly in high-end Android devices. 

Driving Growth Through AI, High-End Mobile, and Expanding IoT Opportunities 

Skyworks expects growth to continue, with improving gross margins due to increased revenue and better factory utilization. The company anticipates further gains in the coming quarters, driven by cost reductions, enhanced factory efficiency, and a favorable product mix. 

AI's impact on mobile technology is just beginning and Skyworks is positioned to benefit from these advancements. A major upgrade cycle is expected as new AI features and RF technologies become standard in next-generation smartphones.  

AI's growth is expected to drive smartphone replacements, enhance IoT devices, and improve vehicle autonomy. Due to this the company is also focusing on expanding into IoT and robotics markets, leveraging its expertise in smartphones.  

In data centers, new technology needs will drive upgrades in networks and computing. Skyworks is prepared to capitalize on these trends with its advanced technology and solutions. 

By the Numbers 

• Q2 Revenue was $905.5M.
• Mobile Profits Accounted for 61% of Total Revenue, Down 21% QOQ.
• Broad Market Profits Were 39% of Total Revenue, up One Percent Sequentially.
• Q3 Was the Sixth Consecutive Quarter of Internal Inventory Reduction.
• Revenue Estimate for Q3 is $1.02B. 

Qorvo, Inc. – July 30th 

Key Takeaways 

• Qorvo Delivered Robust Results, with YOY Growth Driven by Advancements in Automotive, Consumer, Defense and Aerospace, Industrial and Enterprise, Infrastructure, and Mobile Markets.
• Qorvo Secured Significant Design Wins in Automotive.
• Q1 Fiscal 2025 Gross Margins Are Expected To Be the Lowest of the Year Due to Product Mix and Underutilization Effects.
• Despite a Cautious Short-Term Outlook, Qorvo Remains Optimistic About Long-Term Opportunities in 5G, Foldable Phones, AI-Driven Demand. 

Qorvo’s Multi-Market Momentum: A Strong Quarter Despite Challenges 

Qorvo had a strong quarter, showing growth YOY despite a slight sequential decline. The company made significant strides across its key markets, including automotive, consumer, defense, industrial, infrastructure, and mobile.  

Notable achievements include new design wins in automotive, expanded power management solutions for consumer electronics, and advancements in defense and infrastructure technologies. 

Qorvo's Strategic Outlook Forecasts Q1 FY25 As the Low Point for Gross Margins 

Qorvo expects Q1 of fiscal 2025 to be the low point for gross margins due to current product mix and factory underutilization. However, margins are projected to improve in subsequent quarters as these issues are resolved. 

While AI's immediate impact is uncertain, Qorvo is optimistic about its long-term potential, particularly in driving demand for 5G technology and advanced RF solutions. The company anticipates that the December quarter will see a positive impact from customized solutions for high-end smartphones, enhancing margins. 

Overall, Qorvo is confident about growth opportunities in 5G, foldable phones, and other emerging technologies, even though the short-term outlook remains cautious. 

By the Numbers 

• Q2 Revenue was $866.67M, Down 6% QOQ and Up 36% YOY.
• Android 5G Unit Volumes to Grow Over 10% Total in 2024.
• Q2 Inventory Balance Up $16M to $27M.
• Revenue Estimate for Next Quarter is $1.03B, Plus or Minus $25M. 

Advanced Micro Devices, Inc. (AMD) – July 30, 2024 

Key Takeaways  

• Growth in the Data Center and Client Segments Offset Declines in Gaming and Embedded Segments. 
• Cloud Adoption and AI Traction Increased With Rising Demand for EPYC CPUs and MI300X Solutions.
• AMD is Accelerating Its Instinct Roadmap, With Plans to Launch the mi325x Later This Year, Followed by the MI350 Series.
• AMD Continues to Invest in AI, Announcing the Acquisition of Silo AI.  

Q2 Profit Surge Driven by Data Center and Client Segment Growth  

AMD’s profits in Q2 were driven by robust growth in data center and client segments, which were partially offset by declines in gaming and embedded segments. Higher than expected sales of the Instinct, Ryzen, and EPYC processors compensated for weaker demand in other product markets.   

Cloud adoption remained robust as hyperscalers deployed fourth-gen EPYC CPUs for their internal workloads and public instances. There was a strong pull for AMD-powered cloud instances among both enterprise and cloud-first businesses. Over a third of enterprise server wins in the first half of 2024 coming from businesses deploying EPYC data centers for the first time.  

The public preview for the Turin processor in June was well received, showcasing performance advantages in compute-intensive workloads. Turin shipments to leading cloud customers began last quarter, with production ramping up to ensure broad OEM and cloud availability later this year.   

AMD also saw accelerated AI traction with leading cloud and enterprise providers, expanding the availability of MI300X solutions and receiving positive demand signals for general-purpose computing in both client and server processor businesses.   

The data center AI business delivered a third consecutive quarter of record data center GPU revenue. The enterprise and cloud AI customer pipeline grew, with AMD working with system and cloud partners to ramp up availability of MI300 solutions. Tier-2 cloud providers are on track to launch MI300 instances this quarter.  

Client segment profits also saw significant growth, driven by strong demand for previous generation Ryzen processors and initial shipments of next-generation Zen 5 processors.  

Gaming revenue declined due to a dip in semi-custom SOC sales, though gaming graphics revenue increased year-over-year due to improved sales of Radeon 6000 and 7000 series GPUs in the channel. The embedded segment, which marked its bottom in Q1, saw flat revenue sequentially in the second quarter, with early signs of order pattern improvements.  

Strong Momentum Expected to Drive Q3 Growth  

AMD anticipates QOQ growth thanks to strong momentum in the data center and client segments. The steep ramp of AMD Instinct processors, coupled with robust server and client revenue growth, is projected to more than offset the declines in other segments.  

The data center GPU business is on a steep growth trajectory as shipments ramp. AMD is experiencing strong demand for its next-generation Zen 5 EPYC and Ryzen processors. Accelerating the Instinct roadmap, AMD plans to launch the MI325X later this year, followed by the MI350 series in 2025, and the MI400 series in 2026, promising significant performance increases with each iteration.  

AMD recently announced an agreement to acquire Silo AI, Europe's largest private AI lab. This acquisition enhances AMD’s capability to service large enterprise customers optimizing their AI solutions for AMD hardware. Silo AI's expertise in large language model development will accelerate the optimization of AMD’s inference and training solutions. Alongside acquisitions of Sology and Nod.ai, AMD continues to invest in the ecosystem to advance its leadership in computing platforms.  

AMD's upcoming Ryzen 9000 series processors, compatible with existing AM5 motherboards, will extend the company’s performance and energy efficiency leadership across productivity, gaming, and content creation workloads. Customer excitement for the new Ryzen processors is strong, positioning AMD for ongoing revenue share gains based on the strength of its leadership portfolio and design win momentum.  

Semi-custom demand remains soft, as the industry is in the fifth year of the console cycle, with sales expected to be lower in the second half of the year compared to the first half. However, the embedded segment revenue is anticipated to gradually recover in the second half of the year if order pattern improvements continue. Long-term, AMD is building strong design win momentum for an expanded embedded portfolio.  

By the Numbers  

• Q2 Revenue Was $5.84B, Up Nine Percent YOY.
• Data Center Revenue Up 115% YOY to Record $2.8B.
• AMD-Powered Cloud Instances Available From the Largest Providers Has Increased 34% YOY.
• Enterprise Sales Increased By Strong Double Digit Percentage QOQ.
• MI300 Quarterly Revenue Exceeding $1B for the First Time.
• Client Segment Revenue was $1.5B, An Increase of 49% YOY.
• Gaming Revenue Declined 59% YOY to $648M.
• Embedded Segment Revenue Decreased 41%YOY to $861M.
• Q3 Revenue Estimate is $6.71B, Plus Or Minus $300M.  

Lattice Semiconductor Corporation (Lattice) – July 29th, 2024   

Key Takeaways  

• Q2 Revenue Declined Due To Soft Demand in the Industrial and Automotive Sectors.
• Data Center Networking and Server Markets Showed Strength, Offsetting Declines in Wireless Communications.
• Lattice Continued Under-Shipping to End Customer Demand To Manage Inventory Normalization.
• Increased Q2 Booking Levels and a Higher Q3 Backlog Suggest the Market May Have Hit Its Bottom.  

Q2 Revenue Declined Due to Soft Demand in Industrial and Automotive  

Q2 revenue declined as demand remained soft across industrial and automotive industries. Lattice continued to under-ship to end customer demand as inventory normalization continued. Data center networking and server market strength offset the incremental weakness in wireless communications.  

Within communications and computing, Q2 revenue was flat sequentially. The decline in 5G wireless was in line with expectations. This trend in 5G is expected to continue until the price of deployments and CapEx costs come down.  

Q2 booking levels did increase and Q3 has a higher backlog than Q2 at the onset, which is a good indication that the market has hit its bottom. In combination with the new product ramps, there are positive signs for second half of the year revenue results.  

Lattice Focuses on Long-Term Growth with FPGA, AI, and Power Efficiency Solutions  

Estimates for next quarter vary as the company called out a range that could indicate a decline or increase in revenue. The uncertainty stems from the ongoing inventory digestion cycle, as it has greatly impacted results over the past several quarters. While Lattice believes that the overall industry has likely hit its bottom, there are still product lines that have excess supply and will take time to normalize. To manage this situation, Lattice plans to continue under-shipping to true customer demand to allow for that normalization to take place.  

Hardware and software solutions are Lattice’s mainstays for growth over the long term. Investments for future success include the company’s FPGA portfolio, the latest version of the Lattice Sentry solution stack, and power efficiency products for a broad range of communications, computing, industrial and automotive applications.  

Lattice is also targeting AI through products designed for control, management, and security of AI computing systems. Furthermore, Lattice solutions are also being utilized to aggregate and preprocess sensor data for AI processing.  

By the Numbers  

• Q2 Revenue was $124.08M, Down 12% QOQ and 35% YOY.
• Automotive and Industrial Revenue Declined 23% QOQ.
• Q3 Revenue Estimate is Between $117M and $137M.   

ON Semiconductor Corporation (onsemi) – July 29th, 2024   

Key Takeaways  

• Automotive Revenue Has Remained Resilient Due To Strong Demand for Vehicle Electrification and ADAS.
• Onsemi Targets AI With Latest Generation of Products for Data Center Subsystems. 
• Onsemi Will Continue Investing in Silicon Carbide and Intelligent Sensing Technologies, Targeting the Industrial Market’s Demand.
• Onsemi Sees Significant Growth Opportunities in Industrial, Automotive, and AI Data Centers.  

Resilient Automotive Demand and Strategic Innovations Amid Inventory Corrections  

Q2 revenue declined both sequentially and year over year, driven by an ongoing inventory correction in the automotive and industrial end markets. Despite these declines, automotive revenue has shown resilience this year due to strong demand for vehicle electrification and ADAS, supporting onsemi’s strategic shift to focus on automotive since Q4 2020.  

Revenue drops were seen across all business groups, including Power Solutions, Analog and Mixed Signal, and Intelligent Sensing, mainly due to inventory burn in the automotive and industrial markets. Intelligent Sensing experienced a significant decline, despite the market-driving 8-megapixel average selling price.  

As inventory digestion continues, onsemi plans to ship below end consumption levels. Inventory has increased, including extra bridge inventory to support fab transitions in the silicon carbide ramp. Distribution inventory rose as expected, with efforts to keep excess inventory levels lower. Utilization has reached a historic low, positioning onsemi well for market recovery.  

In Q2, onsemi released the latest generation of the T10 PowerTrench family and EliteSiC 650-volt MOSFET, designed for AI data center subsystems. These solutions, including power supply units, battery backup units, and intermediate bus converters, offer superior efficiency and high thermal performance, reducing power losses. They can cut energy consumption by 10 terawatt-hours annually compared to the previous generation, equivalent to powering nearly 1 million homes per year.  

Industrial, Automotive, and AI to Lead onsemi’s Path to Recovery Through 2025  

Onsemi's forecast estimates suggest that revenue may be flat or slightly down due to lingering demand uncertainties. However, the company sees strong opportunities within industrial, automotive, and AI data centers as key growth drivers.  

In the industrial market, demand for silicon carbide remains a focus as customers seek efficient and reliable energy infrastructure and HVAC applications. Onsemi expects regional growth in China and overall market stabilization to continue, supported by investments in intelligent sensing. The acquisition of SWIR Vision Systems will enhance the company’s product portfolio.  

Onsemi leads the silicon carbide market in China and anticipates stabilization as the industrial sector recovers in the second half of the year. Continued investments in analog, mixed signal, and power solutions have resulted in significant design wins, which will drive future profits.  

In the automotive sector, high-efficiency power and sensing solutions are gaining momentum. The BEV market is expected to remain healthy long-term, with significant market penetration in China and an upcoming ramp-up in Europe. A partnership with Volkswagen Group and investments in silicon carbide technology are pivotal for growth.  

AI data centers are another notable growth area for the remainder of the year and into 2025, with Onsemi targeting power consumption as a critical focus.  

By the Numbers  

• Q2 Revenue Declined Seven Percent QOQ and 17% YOY to $1.74B.
• Automotive Revenue Declined 11% QOQ and 15% YOY to $907M.
• Power Solutions Group Revenue Declined 15% YOY to $835M.
• Analog and Mixed-Signal Group Revenue Declined 18% YOY to $648M.
• Intelligent Sensing Group Revenue Declined 22% YOY to $252M.
• Industrial Revenue Declined 2% QOQ and 23% YOY to $468M.
• Base Inventory Increased Six Million Sequentially to a Total of 117 Dyas of Inventory.
• Q3 Revenue Estimate is $1.75B.  

Sanmina Corporation – July 29th, 2024   

Key Takeaways  

• Revenue Increased Slightly Due to Strong Demand in Communication Networks and Cloud Infrastructure.
• Industrial, Medical, Aerospace and Defense, and Automotive Sectors Declined.
• Customer Inventory Absorption Is Improving, Though Slower Than Expected.
• Sanmina Anticipates Positive Trends in Communication Networks, Cloud Infrastructure, AI Applications, and Advanced Optical Packaging.  

Communication Networks and Cloud Infrastructure Up While Other Sectors Decline  

Sanmina experienced a slight increase in Q3 revenue quarter-over-quarter. The communication networks and cloud infrastructure sectors saw significant demand improvement, driving growth in IMS revenue. In contrast, the industrial, medical, defense, aerospace, and automotive sectors saw declines. CPS revenue decreased due to short-term delays in two programs, which have since been resolved for Q4.  

The company called out ongoing soft demand in both industrial and automotive. The priority will continue to be reducing inventory levels and increasing inventory turns.  

Optimistic Trends in AI and Cloud Infrastructure Signal Growth Ahead  

Looking ahead, Sanmina expects continued softness in the automotive sector, while industrial markets show cautious optimism. The medical market remains stable but is still feeling the effects of post-COVID demand changes. Positive trends in communication networks and cloud infrastructure will be driven by new and existing customer programs, AI applications, high-density IP routing, and advanced optical packaging.  

The medical market is supported by digital health innovations and new opportunities. In the automotive sector, the focus is on electric vehicles, connectivity, and advanced driver assistance systems. The industrial and energy markets present opportunities in energy generation, storage, and factory automation. Defense and aerospace bookings remain strong, with high demand for high-technology military boards and systems.  

Customer inventory absorption is improving, albeit slower than expected but forecasts are improving. Visibility for Q4 is progressing, and the company expect sequential revenue growth. Sanmina foresees fiscal year 2025 as a growth year, driven by investments in integrated manufacturing solutions and technology components for AI, enterprise, and cloud infrastructure.  

By the Numbers  

• Q2 Revenue was $1.84B, up 0.4% QOQ.
• Industrial, Medical, Aerospace and Defense, and Automotive Was 64% of Revenue, Down 3.6% QOQ.
• Communication Networks and Cloud Infrastructure was 36% of Revenue, Up 8.3% QOQ.
• IMS Revenue was $1.48B, up 1.1% QOQ.
• CPS Revenue was $388M, Down 2.5% QOQ.
• Days of Inventory Improved to 75. 
• Q3 Revenue Forecast is Between $1.9B - $2B, Up 6% QOQ.  

MaxLinear Inc. – July 24th, 2024  

Key Takeaways  

• Maxlinear Saw Notable Growth in 5G Wireless Infrastructure and High-Speed Optical Interconnects.
• The Company Faced a Downturn in Broadband Demand and Softness in Telecom Markets Due to Inventory Burn-off.
• Regulatory Compliance Issues From Escalating Geopolitical Tensions Contributed to the Decline in Revenue.
• Strengths in Q3 Include Infrastructure, Particularly Optical Data Center. 

MaxLinear Sees Growth in 5G, Optical Interconnects, Ethernet Connectivity 

In Q2, broadband demand declined due to the ongoing burn-off of excess inventory, although MaxLinear believes that the market has hit its bottom. Telecom market demand was similarly weak. MaxLinear’s business was also impacted by regulatory compliance issues stemming from the U.S.-China tensions. These factors hurt shipments and affected both Q2 results and Q3 forecasts. 

Channel inventory is decreasing, with sell-through revenues surpassing sell-in revenues, though improvements are slower than expected. The inventory reduction is happening more gradually due to cautious spending by service providers and a hesitancy regarding technology transitions, such as moving from gigabit PON to 2.5 gigabit and 10G XGS PON. Positive signs include new orders and encouraging feedback from OEMs about falling inventory levels. 

Despite these challenges, MaxLinear successfully launched new products in high-value areas such as optical data center interconnects, enterprise Ethernet, storage accelerators, 5G wireless, PON broadband access, and Wi-Fi 7 connectivity. 

In infrastructure, high-speed optical interconnects performed well, with production for a key data center customer set to start later this year. The Rushmore family is expected to boost market competitiveness and revenue. Additionally, 5G wireless infrastructure saw strong growth in Q2, driven by hybrid microwave and millimeter wave backhaul technologies, and the Panther III series storage accelerators benefited from trends in high-speed computing and AI. 

MaxLinear Prepares for Q3 with Strategic Cost Cuts 

The company noted improved bookings over the past four quarters as inventories have come down, although capital expenditures still weigh on market demand. MaxLinear expects Q3 2024 revenue to decline slightly as the excess inventory situation continues to right itself. Broadband and infrastructure markets may remain mostly flat, while industrial segments could see a decline. Connectivity will grow slightly. 

To address the slow market recovery and delays in some areas, MaxLinear is adjusting its cost structure. Starting in Q3, the company aims to reduce operating expenses by 20% - 25% for fiscal 2025.  

Additionally, the company is entering a phase of reduced R&D spending as some product lines, like optical data centers and Wi-Fi 8, require a faster pace of continued investment. Customer delays in launch plans mean MaxLinear can moderate its spending for the next generation of products, with completed investments set to impact the market around 2025-2026. 

MaxLinear continues to focus on innovation in optical high-speed interconnects, wireless infrastructure, storage, Ethernet, Wi-Fi, and fiber broadband access, which will drive future growth. The company is also leveraging advancements in PON, Wi-Fi 7, and PAM4 technologies to boost revenue. Despite ongoing challenges in broadband and industrial markets, MaxLinear is gaining market share and preparing for a more robust recovery in 2025. 

By the Numbers 

• Q2 Revenue Was $92M, Down 3% QOQ.
• Broadband Revenue Was $22M.
• Connectivity Revenue was $13M.
• Infrastructure Revenue was $32M.
• Industrial Multi-Market Revenue was $25M.
• High Speed Optical Interconnect Business Set to Surpass $30M in 2024.
• Q3 Revenue Forecast is $83.59M. 

Silicon Laboratories Inc. – July 24th, 2024  

Key Takeaways  

• End Market Demand Improved As Bookings and Shipments Increased Significantly.
• Distribution Channel Inventory, Internal Inventory, and Days of Inventory On Hand All Declined Thanks to Successful Excess Reduction Strategies.
• Advancements in Technology, Such as Improved Battery Life and Software Reliability, Are Driving Continued Growth In ESL Market.
• Silicon Labs Expects Growth in IoT and Smart Metering Following Q2 Design Wins. 

Improved Demand, Streamlined Inventory, and ESL Growth Boost Q2 Results 

Silicon Laboratories saw improved demand in Q2, with increased bookings and channel shipments. Distribution channel inventory decreased by the end of the June quarter. This was accompanied by growth in distributor point-of-sale activity, suggesting that many customers are moving through their inventory surplus. Internal inventory also fell, with decreased net inventory and improved days of inventory on hand. 

The electronic shelf labels (ESL) market has grown rapidly, with Silicon Labs strengthening its position by partnering with major global ESL providers. Thanks to technology advancements, like better battery life and software reliability, this segment is now the company’s fastest-growing business. 

The company also achieved significant design wins in smart metering, including major deployments in emerging markets like India and Southeast Asia. Progress with Wi-Fi 6 solutions is showing promise in the Wi-Fi sector, with early success and expected growth as the IoT market expands. 

Silicon Labs Poised for Growth in Q3 

Increasing bookings and shipments into distribution channels are expected to continue as inventory management remains a key focus. However, the timing and extent of the ongoing recovery will be dependent on improvements in end-market demand. 

New design wins and opportunities in insulin management, ESL, and smart metering will contribute to growth in the year's second half. Silicon Labs is poised to benefit from continued growth in ESL, where it holds a leading position. The ESL business is expanding rapidly and will continue to grow as the technology gains global adoption. 

Similarly, smart metering solutions will capture significant market share, bolstered by recent design wins and advancements, including Wi-Fi 6 solutions. The company is also preparing for increased activity in the Wi-Fi sector as initial product launches have been well-received.  

By the Numbers 

• Q2 Revenue was $145.37M.
• Distribution Channel Inventory Fell to 55 Days Last Quarter.
• Net Inventory Declined to $166M and Days of Inventory Came Down to 217 Days.
• Q3 Revenue Forecast is $165.14M. 

STMicroelectronics N.V. (STM) – July 25th, 2024  

Key Takeaways  

• Q2 Revenue Declined YOY Due to Inventory Adjustments and Fluctuating Demand.
• The Industrial and Automotive Sectors Saw the Most Substantial Drops.
• STM Expects a Slight QOQ Revenue Increase, But Continued YOY Decline.
• STM Is Adjusting Its Manufacturing Hours and Cutting Discretionary Costs. 

Variations in Demand and Capacity Oversupply Lead to Challenges in Q2 

STM faced a challenging Q2 due to inventory adjustments and fluctuating demand across various sectors. While total revenue exceeded the forecast midpoint, it declined significantly YOY, primarily due to drops in the industrial and automotive sectors. The Microcontrollers and Power and Discrete segments also saw sequential declines. 

Automotive demand was lower than expected due to reduced backlogs and inventory adjustments. The industrial sector faces a severe and extended inventory correction, with short-cycle businesses like power tools and residential solar being particularly weak. Longer-cycle businesses such as energy storage and EV charging showed more resilience. Due to these trends, the industrial sector saw the most significant decline, followed by automotive and personal electronics. Alternatively, communication equipment and computer peripherals revenue increased. 

Despite these difficulties, STM continued to innovate. They introduced a smart sensor with edge AI processing for industrial and robotics applications and achieved compliance with the new GSMA standard for ECM IoT deployment. STM also secured multiple wins in power discrete technologies and a long-term silicon carbide supply agreement with Geely Auto. 

Q3 Revenue to Grow Sequentially, But Decline on a Yearly Basis 

STM's Q3 net revenues reflect a slight sequential increase but a significant YOY decline. For total 2024 results, STM expects revenues to decline about 22% YOY. 

Several factors contribute to this outlook, including uneven demand normalization, excess capacity, and structural shifts towards sustainability. These elements, combined with short-term market fluctuations, will impact revenue, particularly in the automotive and industrial segments. 

STM is adjusting manufacturing hours and cutting discretionary costs to adapt to current market conditions. The company is also advancing its strategic projects, including the construction of a high-volume silicon carbide manufacturing facility in Catania, Italy. This facility will form part of STM's silicon carbide campus, supporting the company's vision of a vertically integrated manufacturing hub. STM remains focused on long-term growth opportunities driven by megatrends in sustainability and digital transformation. 

By the Numbers 

• Q2 Net Revenue was $3.23B.
• H1 2024 Net Revenue Decreased 21.9% YOY to $6.7B.
• Analog Product, MEMS, and Sensor Revenue was Down 10%.
• Power and Discrete Products Revenue Decreased 24.4% and Microcontrollers Revenue Declined 46%. Digital ICs and RF Products Revenue Declined 7.6%.
• Q3 Net Revenue Is Expected To Be About $3.25B, Representing a YOY Decline of 26.7% and a Sequential Growth of 0.6%.
• 2024 Full Year Revenue Is Projected To Be in the Range of $13.2B - $13.7B, Representing a YOY Decline of About 22%. 

Renesas Electronics Co. – July 25th, 2024  

Key Takeaways  

• Recovery in the Industrial Sector Was Slower Than Expected, Leading to an Adjusted Outlook.
• Gross Margins Improved in the Automotive Sector Due To Higher Utilization.
• Inventory Levels Rose, With Days of Inventory and Channel Inventory Increasing.
• Renesas Has Downgraded Its Outlook for the Next Quarter. 

Automotive Sees Modest Gains, IoT Declines, and Industrial Recovery Remains Slow 

Despite a QOQ and YOY increase in revenue, Renesas faced headwinds due to underwhelming results in the industrial and IoT segments. This trend was offset by a slight improvement in automotive thanks to higher utilization.  

Better manufacturing costs provided some relief for industrial, infrastructure, and IoT sectors but gross margins declined due to product mix and lower order volume. Research and development costs also rose sequentially. 

In infrastructure, AI demand stayed strong, along with traditional data centers. However, factory automation in the industrial market was weak. The outlook for smaller industries in the industrial multimarket sector varied, making visibility into end market demand difficult. 

Growth in China was slightly better than market trends, but increased competition from local suppliers created pricing pressure. Inventory levels rose significantly, with increases in both days of inventory and channel inventory impacting supply chain dynamics. Automotive inventory increased minimally, while IoT inventory unexpectedly rose. 

Renesas Downgrades Outlook for Next Quarter 

Renesas downgraded its outlook due to variations in demand and inventory issues. Q3 revenue will decline sequentially, with a gradual recovery anticipated towards the end of the year. The demand outlook in China appears weaker, but a gradual recovery is projected from Q3 into Q4. Despite the improvements last quarter, lower global unit forecasts and uncertain inventory levels are leading to cautious production plans for the automotive sector. 

Renesas expects long-term benefits from AI developments, with short-term gains anticipated in power devices and potential demand related to client PCs. A recovery in GPU power products is expected in Q4, though no significant spikes are expected from generative AI or MCUs. The company will focus on supporting smaller customers and may lose some market share due to competition with local suppliers in China. 

Renesas plans to control channel inventory more effectively. Days of inventory and channel inventory had increased, leading to expanded die banks for future production. Geopolitical factors, particularly the China +One strategy, reveal disadvantages as local competitors enhance their production capabilities. This impacts Renesas' market share for semiconductor procurement. The focus on mature node manufacturing in China, including Silicon IGBTs and SiC products, may affect Renesas's business. 

By the Numbers 

• Q2 Revenue was $2.33B, Up 2.6% QOQ and YOY.
• Automotive Revenue Increased 6.9% QOQ and 11.5% YOY.
• IoT Revenue Fell 5.5% QOQ and 24.5% YOY.
• Days of Inventory Increased by 103 Days and Channel Inventory Rose to 11 Weeks.
• Q3 Revenue Will Be $2.28B. 

Seagate Technology Holdings – July 23, 2024 

Key Takeaways 

• Strength in HDDs Offset Declines in Legacy and Non-HDD Sectors.
• AI-Related Demand for HDDs is Currently Modest But Expected to Grow Significantly.
• Seagate Anticipates Mass Capacity Revenue to Increase Significantly Next Quarter.
• Ongoing Challenges Include Macroeconomic Uncertainties and A Cautious Approach to Capacity Expansion. 

Q2 Revenue and HDD Demand on the Rise Thanks to Expanding Cloud and AI Opportunities 

Seagate's revenue increased quarter-over-quarter (QOQ) and year-over-year (YOY), driven by strong demand for mass-capacity hard disk drives (HDDs) and effective cost management. Exabyte shipments grew due to heightened demand for mass-capacity products, particularly from global cloud service providers and nearline markets.  

The increase in HDD demand offset declines in legacy and non-HDD sectors. Despite slower-than-expected growth in these markets, the enterprise OEM segment exhibited a gradual improvement in demand. Preparations for future AI applications and higher-density storage solutions bolstered this trend. Although the demand for HDDs related to AI is currently modest, HDDs are expected to play a crucial role in AI data management and content storage.  

The global demand for smart city projects remains robust, though visibility is inconsistent due to macroeconomic uncertainties. Seagate’s focus on new high-capacity drives, including PMR products and upcoming HAMR-based Mozaic drives, supports its strategy of meeting increased exabyte demand while maintaining supply discipline.  

Data Center Storage Revenue to Increase in Q3 Thanks to Advancing HAMR Tech and HDD Trend 

Seagate is progressing with the qualification of its new HAMR technology, specifically the Mozaic 4+ drives. This development aims to meet the anticipated surge in data storage needs driven by the growing adoption of GenAI technologies.  

Despite ongoing challenges and a cautious approach to capacity expansion, Seagate expects a significant increase in Q3 mass capacity revenue. This rise will be fueled by global cloud demand and a slight recovery in nearline enterprise markets. 

Seagate's strategic focus includes leveraging high-capacity products like the Mozaic 3+ drives to provide data centers with more storage capacity per slot and lower power consumption per terabyte. The projected revenue increase and improved gross margins stem from a richer mix of mass capacity revenue and effective pricing strategies.  

By the Numbers 

• Q2 Revenue Totaled $1.89B, Up 14% QOQ and 18% YOY.
• HDD Exabyte Shipments Grew 15% QOQ and Revenue Increased 17%.
• Mass Capacity Revenue Up 22% QOQ, Shipments Represent Over 90% of Total HDD Exabytes.
• Mozaic 4+ Offers 33% More Capacity Than Current HAMR Drives, With Minimal Changes to BOMs.
• Q3 Revenue to Increase 11% QOQ and 44% YOY to $2.1B, Plus or Minus $150M. 

Texas Instruments Inc. (TI) – July 23, 2024 

Key Takeaways 

• Q2 Brought Sequential Declines for Industrial and Automotive, But Personal Electronics, Communication Equipment, and Enterprise Systems Revenue Increased.
• TI is Advancing Its Investment in 300-Millimeter Manufacturing Capacity, Effectively Enhancing Production Efficiency To Meet Future Demand.
• Inventory Levels Increased Slightly With Reduced Days, Reflecting Improved Supply Chain Management and Readiness To Adjust to Demand Shifts.
• TI Anticipates a Revenue Boost in Q3 Due To Seasonal Demand Increases, Stable Lead Times, and Immediate Availability Across Semiconductor Product. 

TI Revenue Increases QOQ Amidst Mixed Demand, Recovery Signs in China Drive Positive Outlook 

TI Q2 revenue increased QOQ but declined YOY. Demand showed varied performance, with the industrial and automotive markets declining sequentially, while personal electronics saw robust growth. Communication equipment and enterprise systems also performed well. Inventory at quarter-end rose, up $23 million from the previous quarter, with inventory days decreasing. 

The recovery in China, where all markets grew sequentially, indicates a positive shift following a prolonged decline. Cancellations decreased, and bookings improved, although the automotive and industrial sectors experienced their third consecutive quarter of decline. Despite these challenges, personal electronics and enterprise markets showed signs of recovery, supported by solid performance in calculators and DLP business.  

Q3 Revenue Boost Expected Thanks to Strong Holiday Season Prep and Expanding Capacity 

TI expects Q3 revenue to increase, reflecting a seasonal uptick in preparation for the holidays. The company expects stable lead times and immediate availability to continue across most industrial and automotive semiconductor products. However, this will have the negative side effect of lower backlog visibility.  

Having likely reached a bottom in Q1 2023, personal electronics may see further stabilization. Meanwhile, forecasts for recovery in the industrial and automotive sectors remain mixed.  

The embedded business is gaining traction, particularly in automotive applications such as real-time control for EVs, radar systems, and industrial MCUs. This sector is expected to be a significant growth driver, leveraging TI’s enhanced product portfolio and channel advantages.  

Factory utilization will be flat to slightly up, with the company maintaining flexibility to adjust production based on Q4 forecasts. TI continues to expand its 300-millimeter manufacturing capacity, emphasizing its strategic importance for long-term value and geopolitical stability. The ongoing investment in capacity and supply chain adjustments position TI well for future demand and operational efficiency. 

By the Numbers 

• Q2 Revenue Totaled $3.8B, Up $23M QOQ.
• Inventory Days Declined by Six Days Sequentially.
• Enterprise Systems Saw the Largest Increase QOQ, Up About 20%.
• Revenue In China Market Grew 20% QOQ.
• All Business Segments in China Increased By About 15-20% QOQ After Seven Consecutive Quarters of Decline.
• Q3 Revenue Forecasts Indicate an Increase to Between $3.9B - $4.26B. 

NXP Semiconductors N.V.  (NXP) – July 30, 2024 

Key Takeaways 

• NXP Sees the First Half of 2024 As The Bottom of Its Cycle.
• Tier 1 Inventory Issues Affected the Automotive Market, and Core Industrial Markets in Europe and the Americas Remain Weak.
• Lean Channel Inventory Expected to Support Ongoing Industrial IoT Growth.
• Based on Demand Recovery Forecasts, NXP Plans to Slightly Boost Channel Inventory. 

NXP’s Resilient Performance Amid Mixed Market Trends and Sector Challenges 

NXP's Q2 revenue was flat sequentially but declined YOY. The results across end markets showed resilience, with minimal deviations from guidance. 

In the automotive sector, revenue decreased due to ongoing inventory digestion challenges with direct Tier 1 customers. Although this trend will likely continue into the second half of the year, sequential growth is anticipated as inventory adjustments progress and new platforms ramp up. 

Revenue increased in the industrial and IoT segment, driven by robust demand in China and the Asia Pacific region. However, European and North American markets remain weak, with the core industrial demand experiencing persistent softness. The mobile segment also saw significant growth, and average seasonal trends are expected to influence this sector. 

NXP's Strategic Push in Automotive, IoT, and Edge Computing 

NXP is on the path to recovery and expects growth to resume in the second half of 2024. The company plans to keep slightly higher inventory levels to stay competitive and prepare for this growth. 

NXP foresees a decline in communications infrastructure and related markets. While secure RFID tagging will contribute to growth, it won’t fully counteract the overall weakness in this segment. 

Despite a weak macroeconomic environment affecting core industrial sectors in the U.S. and Europe, China shows strong growth, particularly in consumer IoT. This highlights a trend where secure edge computing, smartphones, and data-center servers are driving the semiconductor industry. NXP’s focus on automotive, industrial IoT, mobile, and communications infrastructure reflects its strategic priorities. The automotive industry is expected to grow sequentially, driven by new technologies and strong EV performance in China. 

NXP is investing in long-term growth with a new 300-millimeter fab in Singapore, set to be operational by 2029. This facility will focus on mature node manufacturing and produce 55,000 wafers monthly, supporting NXP’s strategy and future demand. 

By the Numbers 

• Automotive Revenue for Q2 was $1.72B, Down 4% QOQ and 7% YOY.
• Industrial and IoT Q2 Revenue was $616M, Up 7% QOQ and YOY.
• Mobile Q2 Revenue was $345M, Down 1% QOQ and up 21% YOY.
• Communication Infrastructure and Other Revenue for Q2 was Up 10% QOQ, but Down 23% YOY.
• Q3 Revenue Expected to be $3.25B, down 5% YOY and Up 4% QOQ. 

Taiwan Semiconductor Manufacturing Co. (TSMC) – July 18, 2024 

Key Takeaways 

• High-Performance Computing (HPC) Accounted for Over 50% of Total Revenue for the First Time.
• Inventory Levels Decreased by Seven Days to 83 Days, Driven by Higher Shipments of N3 Wafers.
• Smartphone and AI Demand To Fuel Revenue Growth in Q3 and Second Half of 2024.
• The Semiconductor Market, Excluding Memory, Forecasted To Grow 10% YOY, Based on Continued Success in Advanced Technology Nodes. 

HPC Growth Drive Record Revenues and Inventory Improvement 

TSMC's Q2 revenue increased, driven by robust demand for its industry-leading 3nm and 5nm technologies. Demand for advanced technologies bolstered the company's performance despite headwinds from typical seasonal declines in smartphone demand. High-Performance Computing (HPC) saw a significant revenue increase, exceeding 50% of total revenue for the first time.  

Inventory levels improved, with days of inventory decreasing due to higher shipments of N3 wafers.  

TSMC Projects Strong Growth in Q3 and 2024 Driven by Smartphone and AI Demand 

TSMC expects revenue to rise both QOQ and YOY, driven by seasonal demand for smartphones and expanding AI applications using advanced technologies. The semiconductor market (excluding memory) is projected to grow by about 10% for the year. 

The demand for TSMC's 3nm and 5nm technologies remains robust, with high-performance computing (HPC) customers advancing faster than smartphone customers due to concerns about bandwidth and latency. This is influencing the rapid uptake of edge AI technologies. 

TSMC continues to invest heavily in advanced technologies, with 70-80% of its 2024 capital budget allocated for advanced process technologies. The company's 2nm technology is progressing well, with volume production expected in 2025. Following this, the N2P extension, offering further performance and power benefits, is slated for production in the second half of 2026. Additionally, the A16 technology, featuring the innovative Super Power Rail (SPR) for backside power delivery, is scheduled for volume production in the second half of 2026. 

The company remains committed to its expansion plans, advancing projects in Arizona and Kumamoto, with potential future sites in Europe. TSMC faces various cost challenges, including increasing process complexity, higher electricity costs, and global fiber expansion in more expensive regions. As a result, pricing strategies will vary across product sectors to address these challenges strategically. Customers will bear the costs associated with import tariffs. 

Supply remains tight and is expected to stay constrained through 2025, with potential easing in 2026. 

By the Numbers 

• Q2 Revenue Increased 10.3% QOQ to $20.8B.
• Advanced Technologies Accounted for 67% of Total Wafer Revenue.
• 3NM Contributed 15% to Total Wafer Revenue, 5NM Contributed 35%, and 7NM Contributed 17%.
• HPC accounted for 52% of Total Revenue, Increasing 28% QOQ.
• The IoT and Automotive Sectors Showed Growth, Increasing by 6% and 5% Respectively.
• Days of Inventory Fell by Seven Days.
• TSMC Expects the Foundry Industry to Grow by 10% YOY.
• Q3 Revenue to Increase 9.5% QOQ and 32% YOY to Between $22.4B - $23.2B.