Market Intelligence
July 1, 2024

From the Source's Mouth | Q1 2024

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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.  

 

Micron Technology, Inc – June 26, 2024 

Key Takeaways 

  • Micron’s Fiscal Q3 Data Center Revenue Surged Over 50% Sequentially, Driven by High-Margin Products Like HBM and SSDs.
  • DRAM and NAND Revenue Benefitted From a 20% Price Increase Throughout Last Quarter.
  • Over 80% of DRAM and 90% of NAND Bit Production Utilized Leading-Edge Nodes, With Operational Resilience Demonstrated Despite Disruption.
  • Micron Secured a $6.1B CHIPS Act Grant for U.S. Expansion to Support High-Volume Production of 1-Gamma DRAM and Next-Gen NAND in 2025. 

AI-Driven Demand Propels Micron’s Q3 Revenue and Market Expansion 

Micron reported fiscal Q3 revenue, gross margin, and EPS above guidance ranges due to robust price increases and a strong product mix. AI-driven demand surged, boosting data center revenue by over 50% QOQ, particularly in high-margin products like HBM, high-capacity DIMMs, and SSDs. Most data center inventories normalized, and demand strengthened. Automotive revenue also reached a record high. 

DRAM revenue, accounting for 69% of total revenue, was $4.7B, up 13% sequentially with a 20% price increase. At $2.1B, NAND revenue rose 32% sequentially, with high single-digit bit shipment growth and a 20% price increase. Micron advanced its technology with over 80% of DRAM and 90% of NAND bit production on leading-edge nodes.  

Despite disruptions from a Taiwan earthquake, operational resilience led to expected DRAM and NAND cost reductions. The company secured a $6.1B grant under the CHIPS Act to support memory manufacturing expansions in Idaho and New York. Micron achieved full validation for 1-beta 128GB DIMMs, and market share in data center SSDs reached new records as revenue nearly doubled sequentially. 

Furthermore, HBM continued to gain traction and delivered over $100M in HBM3E profits. 

Continued Price Increases and Record Revenue Forecasts for Data Center Business 

Micron anticipates continued price increases through 2024 due to AI related data center, PC and smartphone demand. AI PCs and smartphones will grow, driving significant market activity for DRAM and NAND. The company is on track for high-volume production of 1-gamma DRAM and next-gen NAND in 2025. 

Data center revenue will reach record levels in fiscal 2024, with industry server shipments growing due to AI servers. Projections indicate tight supply conditions for DRAM and NAND, driven by HBM production ramp-up. Fiscal 2024 CapEx will be around $8B, with a significant increase in 2025 to support HBM and fab construction investments. 

In the long term, enabling artificial general intelligence (AGI) will drive substantial demand for DRAM and NAND. Industry bit growth will be in the mid-teens percentage for DRAM and NAND. Strategic investments in new fabs aim to align supply growth with demand, ensuring responsive market conditions management and long-term supply capabilities. 

By the Numbers 

  • Total Quarterly Revenue Increased 17% QOQ and 82% YOY to $6.8B.
  • DRAM Revenue Increased 13% QOQ to $4.7B.
  • NAND Revenue Increased 32% QOQ to $2.1B.
  • DRAM and NAND Pricing Increased 20%.
  • Compute and Networking Business Revenue Went Up 18% QOQ to $2.6B.
  • Mobile Business Unit Revenue Fell 1% QOQ to $1.6B.
  • Embedded Business Unit Revenue Increased 16% OQ to $1.3B.
  • Storage Business Revenue Increased 50% QOQ to $1.4B. 

 

Broadcom Inc. – June 12, 2024 

Key Takeaways 

  • AI Revenue Surged 280% YOY to $3.1B, Highlighting Robust Demand for AI Networking and Custom Accelerators.
  • The Integration of VMware Contributed to Infrastructure Software Revenue, Up 175% YOY.
  • Networking Revenue Grew 44% YOY, Driven By Demand From Hyperscalers For AI-Driven Networking Solutions and Customer Accelerators.
  • AI-Related Revenue Forecasted to Exceed $11B, Non-AI Semiconductor Revenue to Recover Modestly in Second Half of 2024. 

Strong Growth Driven by AI and Strategic Acquisitions 

Broadcom's second quarter of fiscal year 2024 showcased robust financial performance driven by strategic initiatives and market dynamics. Consolidated net revenue surged to $12.5B, a remarkable 43% increase YOY, buoyed significantly by the inclusion of VMware's full-quarter contributions. Excluding VMware, organic revenue still demonstrated strong growth, rising by 12%. An impressive 280% YOY increase in AI revenue, which reached $3.1B, fueled the growth in VMware profits. This expansion effectively offset the persistent cyclical weakness in semiconductor revenues from enterprise and telecommunications sectors. 

The integration of VMware has been a pivotal success, with Broadcom streamlining product SKUs and simplifying go-to-market strategies, which eliminated substantial channel conflicts. Revenue from infrastructure software, including VMware, soared to $5.3B, marking a significant 175% YOY increase. The Annualized Booking Value (ABV) for VMware products accelerated from $1.2B in Q1 to $1.9B in Q2, underscoring strong customer adoption and contractual commitments. 

Despite challenges in non-AI semiconductor segments, Broadcom's networking revenue surged by 44% YOY to $3.8B, driven by heightened demand from hyperscalers for AI networking and custom accelerators. The company doubled its switches and PCI Express components sales, laying a robust foundation for future growth in high-bandwidth data centers. 

Optimistic Outlook Focused on AI Expansion and Semiconductor Recovery 

For the remainder of fiscal year 2024, Broadcom maintains an optimistic outlook. The company expects AI-related revenues to continue their robust growth trajectory, projecting revenues to surpass $11B for the fiscal year. In contrast, non-AI semiconductor revenues bottomed out in Q2 and are anticipated to recover modestly in the second half of fiscal '24 as market conditions stabilize. 

Broadcom is poised to leverage its leadership in AI and networking technologies to capitalize on the expanding demand for high-performance computing solutions. Investments in next-generation AI accelerators and optical interconnects, targeting 800 gigabit and 1.6 terabit bandwidths, underscore its commitment to driving innovation in data center infrastructure. 

Infrastructure software, particularly VMware, is expected to continue its upward trajectory. Revenue is projected to reach a $4B per quarter run rate, driving operational margins closer to Broadcom's established software margins by fiscal 2025. Broadcom has revised its fiscal '24 revenue guidance to $51B, reflecting confidence in sustained growth across its diversified portfolio and strategic business units. 

By the Numbers 

  • Consolidated Revenue Increased by 43% YOY.
  • Excluding VMWare Contributions, Q2 Revenue Increased 12% YOY.
  • Semiconductor Solutions Segment Revenue Increased 6% YOY.
  • Infrastructure Software Segment Revenue Increased 170% YOY.
  • Consolidated Revenue for the Fiscal Year Raised to $51B.
  • Forecasts for Q2 Indicate Revenue Will Be $28B, Plus or Minus 2%. 

 

Marvell Technology, Inc. – May 30, 2024 

Key Takeaways 

  • Data Center Revenue Increased 87% YOY, Fueled by Demand from Cloud AI Applications and Custom AI Compute Programs.
  • Despite Challenges in Enterprise Networking and Carrier Markets, Marvell Maintained Solid Overall Performance.
  • Modest Revenue Recovery in the Enterprise Networking and Carrier Markets Expected in the Second Half of Fiscal 2025 as Inventory Levels Normalize.
  • The Automotive and Industrial Markets Forecasted To Stabilize and Grow, Supported by New Vehicles and Increased Ethernet Content. 

Robust Data Center Demand Drives Q1 Results 

In the first quarter of fiscal 2025, Marvell reported a revenue of $1.16B, exceeding the midpoint of its guidance, driven by robust demand in the data center end market. This strong performance was complemented by disciplined expense control. 

The data center segment stood out, achieving record revenue of $816B, a remarkable 87% year-over-year increase and a 7% sequential growth. High demand from cloud AI applications for Marvell's electro-optics portfolio fueled this growth. Products within the portfolio that saw the most robust demand trends included PAM, DSPs, TIAs, drivers, and ZR data center interconnect products. 

The initial shipments of custom AI compute programs contributed significantly to this performance. The data center revenue accounted for approximately 70% of Marvell’s total revenue, highlighting the company's strong presence in the connectivity and custom compute products market. However, other segments, such as enterprise networking and carrier markets, experienced a period of inventory correction and soft demand, with revenues declining to $153M and $72M, respectively. Despite these challenges, Marvell's strategic focus on AI and data center technologies ensured a solid overall performance in the first quarter. 

AI and Advanced Interconnect to Bolster Growth in Fiscal 2025 

Looking ahead to the second quarter and the remainder of fiscal 2025, Marvell expects continued growth in its data center segment, projecting a mid-single-digit sequential increase in revenue. This growth will be driven by the ramp-up of custom AI silicon and the introduction of new interconnect solutions like the 200 gig per lane 1.6T products and 400 gig ZR DCI modules, which are anticipated to further enhance their market position. AI-related revenues are projected to exceed initial targets for the fiscal year, buoyed by the continued expansion of cloud custom AI programs and strong demand for electro-optics products. 

In the enterprise networking and carrier markets, which faced significant inventory corrections in the first quarter, Marvell anticipates a modest revenue recovery in the second half of the fiscal year as inventory levels normalize. Despite a revenue decline in Q1, the automotive and industrial markets are expected to stabilize and grow in the latter half of the year, driven by new vehicle production and increased Ethernet content in upcoming automotive models. 

Marvell's strategic investments in AI, data center, and advanced interconnect solutions position the company for sustained growth and market leadership throughout fiscal 2025. Supply chain professionals should align their strategies with these emerging trends to capitalize on the expanding opportunities in high-performance computing and data center infrastructure, ensuring they are well-prepared to meet the growing demands of this dynamic market. 

By the Numbers 

  • Revenue Declined 12% YOY and 19% QOQ to $1.161B.
  • Data Center and Enterprise Networking Contributed the Most By End Market to Revenue Results, Totaling 70% and 13% Respectively.
  • Forecasted Revenue for Next Quarter is $1.25B, Plus or Minus 5%. 
  • Forecasts for Q2 Indicate Revenue Will Be $28B, Plus or Minus 2%. 

 

Analog Devices, Inc. (ADI) – May 22, 2024

Key Takeaways 

  • Revenue Reached $2.16B Marking a Potential Turnaround From the Cycle’s Low Point.
  • Global Manufacturing PMIs Are Improving, Stabilizing Customer Inventories, and Enhancing Bookings for Three Consecutive Quarters.
  • ADI Is Bolstering Its High-Performance Franchise Across Healthcare, Industrial Automation, and Automotive.
  • Significant Growth Is Expected in High-Performance Compute, Memory Test Sectors, and Advanced Connectivity Platforms. 

Analog Devices Sees Strong Performance as Economic Recovery Bolsters Results 

Analog Devices (ADI) concluded the last quarter with impressive results, reporting revenues of $2.16B, which exceeded expectations and led to earnings per share finishing above the high end of forecasts. This strong performance signals a potential turnaround from the recent semiconductor industry downturn. Improved global manufacturing Purchasing Managers' Index (PMI) figures contributed to this success, indicating a broader economic recovery. Customer inventory levels stabilized, and ADI saw bookings increase for the third consecutive quarter, pointing to growing demand across its core business sectors. 

Despite these positive indicators, ADI remains cautious due to ongoing economic uncertainties and geopolitical tensions. All of ADI’s market segments saw YOY decline, but overall profits were bolstered by operational efficiency and cost control, gross margin management, market diversification, and sequential revenue growth. The company continues to prioritize disciplined management practices to navigate near-term challenges effectively. Strategic initiatives are focused on enhancing operational efficiency and sustaining growth momentum amid fluctuating market conditions. 

Strategic Growth Initiatives and AI Integration Color Next Quarter Forecasts 

Looking ahead to the next quarter and through the remainder of the year, ADI anticipates maintaining its strategic focus on strengthening its high-performance franchise across multiple sectors. In healthcare, ADI is poised to capitalize on the expanding surgical robotics market and continuous glucose monitoring solutions, leveraging its precision signal processing and connectivity capabilities. The company expects robust growth in industrial automation, driven by the acceleration of digital factory upgrades and the adoption of higher bandwidth industrial Ethernet solutions. 

Automotive remains ADI's key growth area, particularly with the proliferation of vehicles incorporating advanced power management, connectivity, and sensor platforms. The shift towards higher-content vehicles, including hybrids and electric vehicles (EVs), is expected to fuel demand for ADI’s solutions in advanced safety systems and electrification technologies. 

ADI’s strategic roadmap also emphasizes significant investments in artificial intelligence (AI). The company aims to integrate AI across its product portfolio, enhancing performance and efficiency from sensor to cloud applications. This includes optimizing power architectures for AI compute systems and advancing connectivity infrastructure to support higher data speeds and secure transmission. 

By the Numbers 

  • YOY Revenue Declined 34%.
  • Industrial Revenue Declined 44% YOY.
  • Automotive Revenue Declined 10% YOY.
  • Communications Revenue Declined 45% YOY.
  • Consumer Revenue Declined 9%.
  • Days of Inventory Declined from 201 to 192.
  • Q3 Revenue Outlook is $2.27B, Up 5% QOQ. 
  • Forecasts for Q2 Indicate Revenue Will Be $28B, Plus or Minus 2%. 

 

NVIDIA Corporation – May 22, 2024 

Key Takeaways 

  • H200 and Blackwell Platform Demand is Already Heightened and Outpacing Availability. 
  • Forecasts Indicate the Networking Market Will Return to Sequential Growth in Q2. 
  • Generative AI and Industrial Digitalization To Drive the Next Wave of Demand Within Pro Visualization. 
  • New Products for the Chinese Market Demonstrate an Adaptive Strategy To Maintain Market Presence Despite Export Control Licenses. 

Nvidia Outperforms Revenue Expectations With Data Center Success 

Nvidia surpassed expectations in Q1, achieving a revenue surprise of $1.45B. The data center segment excelled, with results increasing by 427% year over year. The Hopper GPU architecture significantly contributed to this growth, driven by enterprise and consumer internet companies, along with cloud service providers. Additionally, training and inferencing AI on Nvidia CYDA bolstered substantial cloud rental revenue. 

Nvidia reported an 80% attachment rate of the Grace Hopper in supercomputing as customers seek its high energy efficiency and performance. The Grace Hopper now holds the top three positions among the most energy-efficient supercomputers globally. 

Moreover, Nvidia began sampling the H200 last quarter, which is now in production, with shipments on track for Q2. The H200 is already experiencing constraints due to heightened demand. 

The automotive segment saw sequential growth, with a year-over-year increase driven by the ramp-up of AI cockpit solutions and self-driving platforms. Gaming revenue declined sequentially but rose year over year, aligning with an anticipated seasonal decline. Despite the sequential dip, the GeForce RTX Super GPUs performed well in Q1, with solid end demand and healthy channel inventory levels. 

Pro visualization revenue also declined sequentially but recorded a significant year-over-year increase. Networking year-over-year growth was driven by InfiniBand, although revenue declined modestly on a sequential basis due to supply timing issues failing to meet demand. 

Strong Demand and Production Ramp-Up Contribute to Ongoing Positive Outlook 

Nvidia anticipates continued growth in demand for the Hopper series, with the H200 and Blackwell platforms already experiencing higher demand than supply. The Blackwell platform is in full production, with system and cloud partners preparing for its global availability later this year. Shipments for Blackwell will begin in Q2, expand in Q3, and by Q4, data centers will be fully outfitted with the new product. Customers upgrading to the Blackwell platform will be able to transition easily from the H100 or H200 to the B100. Current forecasts indicate that demand will exceed supply well into next year. 

The InfiniBand networking segment is expected to return to sequential growth in Q2. Spectrum-X began shipping in Q1 and is ramping up in volume with multiple customers, including a massive 100,000 GPU cluster. Spectrum-X opens a new market for Nvidia networking, enabling Ethernet-only data centers to accommodate large-scale AI. Nvidia expects Spectrum-X to become a multibillion-dollar product line within a year. 

Generative AI and industrial digitalization will drive the next wave of demand within pro visualization. Applications contributing to this demand include industrial software and workflow digitalization. For example, BYD, the world's largest electric vehicle maker, is adopting Omniverse for virtual factory planning and retail configurations. 

In the automotive sector, AI is driving innovations in autonomous driving capabilities and expanding AI infrastructure. The automotive industry and consumer internet represent strong growth verticals for Nvidia. 

Nvidia’s introduction of new products tailored for China, circumventing export control licenses, signifies an adaptive strategy. However, the significant decline in Data Center revenue following recent export restrictions underscores the company's challenges and competitive pressures in maintaining its market position in China. 

By the Numbers 

  • Q1 Revenue was $26B, up 18% QOQ and 262% YOY. 
  • Q1 Data Center Revenue was $22.6B, Up 23% QOQ and 427% YOY. 
  • Compute Revenue Grew Over Five Times YOY, While Networking Revenue Expanded More Than Three Times YOY. 
  • Nvidia’s Blackwell GPU Offers 4x Faster Training and 30x Faster Inference Than the H100, Enabling Real-Time Generative AI. 
  • Forecasts for Q2 Indicate Revenue Will Be $28B, Plus or Minus 2%. 

 

Diodes Inc. – May 9, 2024 

Key Takeaways 

  • Recovery in Consumer, Computing, and Communication Markets Was Less Dramatic Than Forecasts Indicated. 
  • Automotive and Industrial Revenue Stayed on Target, Despite Inventory Digestion Challenges. 
  • Seasonal Growth Expected To Return Based on Demand Improvements and Channel Inventory Stabilization That Materialized Towards Quarter End.
  • Driving Underloading Utilization at Facilities Remains a Key Strategy To Helping the Channel, and Customers, Work Through Excess Supply. 

Consumer, Computing, and Communication Headwinds Slow Recovery 

At the beginning of the quarter, slower-than-expected recovery in the consumer, computing, and communication markets created headwinds, exacerbated by the seasonal effects of the Lunar New Year holiday. On the enterprise side, the inventory depletion rate was sluggish. 

In contrast, the automotive and industrial sectors remained within revenue targets. Despite this, demand was lower than anticipated by optimistic forecasts, leading to reduced loading at manufacturing facilities and flat sequential revenue results. 

However, demand improved toward the end of the quarter as customer inventory levels stabilized. 

Steady Improvements in Computer and Consumer Markets Create Optimistic Outlook 

Looking ahead, Diodes is optimistic that Q1 was the trough quarter and expects to see a return to seasonal growth in Q2. While the automotive sector may still face challenges as customers manage excess supply, there is promising momentum and design win activity in key product areas. 

In the computer market, Diodes expects inventory to remain healthy alongside gradual improvements in revenue, bolstered by the AI server market. The communication market will likely continue to work through demand. The recovery on the smartphone side of Diode’s market segment will gradually appear over the coming quarters. New consumer market designs will begin in Q2 and peak in Q3, hopefully boosting demand further. 

By the Numbers 

  • Q1 Revenue Totaled $322.7M, Down 6% QOQ. 
  • Combined Revenue for Automotive and industrial Remained Above Targeted 40%. 
  • Q2 Revenue Forecasts Indicate $316M, Plus or Minus 3%, a Growth of 4.6% QOQ. 

 

Allegro MicroSystems Inc. – May 9, 2024 

Key Takeaways 

  • Quarterly Declines Recorded Across Automotive, Industrial, and E-Mobility Segments. 
  • Long Term Resiliency Shines Through in Full-Year Results. 
  • Growth Opportunities in EV Production Hold Steady Despite Other Companies Losing Momentum. 
  • Allegro Bets on Long Term Profitability, Launches New Products to Bolster Portfolio. 

Automotive, Industrial, and E-Mobility Decline QOQ, Despite Strong Fiscal Year Totals 

Quarterly sales for automotive, industrial, and e-mobility sectors declined sequentially. From a product perspective, magnetic sensor sales outperformed power products, yet both segments experienced a five to seven-percent sequential decline in sales. However, full yearly results highlighted Allegro’s long-term strength, with overall sales increasing and e-mobility sales leading the growth. 

Despite concerns over slowing EV momentum, Allegro noted that battery electric vehicle production is growing at 25%, while hybrids are growing at 16%. Allegro's products are well-positioned to benefit from increased demand, as every OEM is working to bring new models to market. The company attributes its positive results and outlook to its global perspective, noting that it hasn’t seen a slowdown in EV production or program design outside the U.S. market. 

Allegro also launched a record number of products, introducing over 30 new offerings. The company extended its leadership in magnetic sensing through the acquisition of Crocus. Furthermore, Allegro’s ExtremeSense TMR technology is expanding to automotive, industrial, and healthcare applications. Additionally, Allegro is investing in its photonics business to further develop its magnetic sensing and power portfolio. 

Trends, Troughs, and the Rise of EV Production Color Allegro’s Outlook 

Industrial end markets will remain muted as the scales of supply and demand will remain imbalanced until the latter half of the year. Automotive will likely experience a trough quarter before returning to sequential growth due to inventory digestion challenges. However, EV production will expand in the double-digit range and offset excess supply-related losses. 

Heading into Q3, Allegro expects customers' order patterns to return to historically normal. Despite automotive being the first to enter an inventory rebalancing mode, it will likely be the first to come out of that cycle. 

By the Numbers 

  • Quarter sales were $241M, a Decline of 6% QOQ and 11% YOY. 
  • Automotive Sales Dipped 7% QOQ But Increased 2% YOY. 
  • E-Mobility Sales Dropped 14% QOQ, But Fiscal Year Revenue Grew 38%. 
  • Revenue for the Fiscal Year Grew 8%. 
  • Achieved Record Annual Sales Totaling Over $1B. 
  • Next Quarter Revenue Will Range Between $160M - $170M. 

 

Vishay Intertechnology, Inc. – May 8, 2024 

Key Takeaways 

  • Despite Inventory Oversupply and Demand Fluctuations, Gains in Inductors and Passives Offset Declines in Other Segments. 
  • Automotive and Industrial Segments Declined. 
  • Infrastructure Projects and Computing Demand for AI Servers Expanded, Leading to Improved Bookings. 
  • Several Facilities Will Begin Commercial Shipments and Automotive Qualifications Between 2024 and Early 2025. 

Semiconductor Industry Shows Resilience, but Market Segment Performance Varies  

The impact of inventory digestion on demand led to a sequential decline in revenue, with semiconductor products experiencing a greater level of oversupply than passives. However, this was offset by increases in inductors and passers, demonstrating the industry's ability to adapt and balance. 

By market segment, automotive declined slightly due to weak EV program demand and the beginning of annual contracts, which impacted pricing. However, hybrid and ICE demand is steady or gradually increasing, depending on the market location. 

Industrial demand and revenue also declined due to the digestion of semiconductor inventory. Demand remained weak in Asia, influenced by the ongoing economic uncertainties in China. Europe and the Americas remain sluggish as customers continue to manage excess supply. Despite the softer revenue results, there were improvements in infrastructure and renewable projects. Vishay noted receiving a sizable order from a European industrial customer for the grid, and the multiyear program will support demand through 2027. 

Healthcare also decreased, as did computing, telecom, and consumer revenue. Even though telecom and consumer demand remain soft, computing improved in Asian markets based on demand for AI servers and notebooks as the next computer upgrade cycle begins. Design activity rose 21% YOY in anticipation of this, along with demand for AI servers. 

Aerospace and defense revenue increased QOQ and YOY, with continued strong demand in commercial aviation and weapons systems. 

Potential Recovery Emerges for Q2 and Beyond 

Looking ahead to Q2, there are signs of potential recovery. Inventory corrections are expected to continue, but there is optimism that recovery may materialize in the second half of the year for passives, primarily driven by the aerospace and defense segment. Bookings are also showing signs of improvement in industrial and computing markets, albeit gradually. While the semiconductor book-to-bill continues to lag, the recovery is likely to extend into the third quarter. 

Vishay is progressing on five key capacity expansion projects. In La Laguna, Mexico, the facility began shipping commercially qualified inductors in Q1 2024, with automotive qualifications expected by the second half of 2024, aiming for a 15% capacity increase. In Juarez, Mexico, the facility qualified and shipped current sense resistors in Q1, with ongoing automotive qualifications and a projected 15% capacity increase. In Taipei, Taiwan, diodes are being qualified for shipments starting in Q3 2024, with overall capacity set to increase by 5.5% and select products seeing a 32% boost. Turin, Italy, faced delays but expects to ship qualified diodes by early 2025. In Newport, the facility is transferring five technologies and will start qualifying products by Q4 2024, with shipments extending into early 2025.  

By the Numbers 

  • Q1 Revenue was $746.3M, a 5% QOQ Decline. 
  • OEM Revenue Declined 6% QOQ and 7.8% YOY. 
  • Average Selling Prices Fell 2.5% QOQ. 
  • Added Three Subcontractors for Passives and One for Semiconductors, In addition to Capacity Expansion Efforts for Other Commodity Products. 
  • Q2 Revenue Will be $750M. 

 

Infineon Technologies AG – May7, 2024 

Key Takeaways 

  • Market Environment is Generally Weak. 
  • Cycle is Bottoming in Consumer, Computing, and Communication. 
  • Dynamics Impact Forecasts for Industrial and Automotive, with Slowing EV Adoption Greatly Influences Automotive. 
  • Structural Opportunities Are Electromobility, ADAS, Renewable AI, Data Center, and IoT. 

Consumer, Computing, Communication, and IoT Near Bottom of Cycle 

Demand and inventory dynamics are unfolding at a slower pace compared to past industry cycles, with certain application areas experiencing more pressure from the downturn than others. Automotive has shown resilience, particularly in microcontrollers, as secular content growth persists despite challenging market conditions. However, EV growth in Western markets is decelerating, prompting OEMs and Tier 1s to reassess inventory levels. 

Consumer, computing, communication, and IoT markets are stabilizing but have yet to fully recover. Demand for components, MOSFETs, and ICEs for consumer-facing applications lagged behind products for smartphones and servers, which experienced an increase in demand. AI remains a bright spot in computing. Industrial end markets are exhibiting typical late-cycle behavior due to ongoing inventory digestion. 

Infineon scored a significant win in its silicon carbide technology portfolio with the launch of the Xiaomi SU7 family and the supply of advanced CoolSiC modules for models with an 800-volt drive train. This development allows the company to offer Xiaomi comprehensive systems solutions with over 60 components, including various MCUs from the AURIX, TRAVEO, and PSoC families. Infineon's commitment to expanding SiC is evident in the progressing production of SiC at the Kulim sites, including the expected transition to 200 mm. 

Shifting Automotive Trends Lead to Lower Forecasts 

Growth in the automotive market is expected to slow as global car production remains steady but relatively flat, with customers adjusting automotive semiconductor inventories downward. Similar patterns are anticipated in global EV growth. 

The weakness in green industrial power is projected to persist, with expectations for gradual recovery shifting to late 2024 or early 2025. Infineon revised its revenue growth expectations for SiC to 20% due to a more cautious demand environment. 

Connected systems may be reaching a bottom in terms of market cycles. Demand for consumer IoT and smart card products has stabilized, with the pace of channel inventory correction slowing down. Additionally, distributors are engaging in small restocking within the Wi-Fi subsegment. 

Despite challenges, the semiconductor industry is poised for growth, driven by structural trends like AI proliferation. For instance, Infineon highlighted the significant increase in power-related components per server rack due to AI adoption. With top-notch solutions for managing power across various processes, Infineon is well-positioned to capitalize on this trend. Moreover, the company is ready to seize growth opportunities in Edge AI, further enhancing its prospects. 

By the Numbers 

  • The Global Automotive Market Grew 16.5%, Infineon’s Automotive Market Grew 26.2%. 
  • Within Automotive, Infineon is Number One in Korea and China, Number Two in Europe and Japan, and Number Three in North America. 
  • Green Industrial Power Sales Declined 4%. 
  • Power and Sensor System Segment Revenue Declined 7% QOQ. 
  • Revenue Expectations for the Year Were Lowered to About $17.08B, Plus or Minus $452M. 

 

Microchip Technology Inc. – May 6, 2024 

Key Takeaways 

  • FPGAs Achieve Record Revenue Despite Overall Declining Sales and Inventory Challenges. 
  • Acquisitions of VSI and Neuronix AI Labs Demonstrate Expanding Capabilities in Automotive Networking and AI-Enabled Edge Solutions. 
  • Notable Areas of Strength Include the AI Segment of the Data Center, Aerospace, and Defense. 
  • Microchip Is Optimistic About Market Recovery, Evidenced by Decreasing Cancellation and Pushout Requests and an Uptick in Bookings. 

FPGAs Set Revenue Record Amidst Prolonged Excess Supply Cycle 

Sales decreased last quarter, leading to an increase in days of inventory. This result was in line with guidance, as Microchip expected inventory correction to continue throughout the year. While analog net sales declined, FPGA sales performed well and set a new record for fiscal year results. Design win momentum for FPGAs is strong across multiple end markets.  

Microchip consequently closed the acquisition of Seoul, Korea-based VSI, an ADAS, and Digital Cockpit Connectivity Pioneer to enhance its automotive networking market leadership. Microchip also acquired Neuronix AI Labs to expand its capabilities for power-efficient AI-enabled edge solutions deployed on FPGAs. 

Notably, the few areas of strength were the AI segment of data centers along with aerospace and defense. Some industrial customers continued to navigate weakness, but others began to see the bottom of their cycle. 

Bookings Pick Up, Leading to Optimistic Forecasts that Microchip Cycle is Bottoming 

Microchip expects inventory dollars to increase modestly alongside rising days of inventory. While this will depress revenue, Microchip believes this is the low point of their company’s cycle. A portion of this inventory represents products that Microchip purchased ahead of last-time buy dates, which speaks to the company’s strategic plan to invest in building inventory for long-lived, high-margin products. 

However, there are early signs of market recovery. Cancellation and pushout requests have begun to subside, and bookings are picking up. Even with this, Microchip’s global factories are running at lower utilization rates and maintain two-week shutdown plans to control excess supply growth. The company has no plans to resume capacity expansion in 2024 and expects 2024 CapEx to be low. 

To strengthen its portfolio when demand rebounds, Microchip plans to announce entry into the 64-bit embedded microprocessor market, effectively extending its 32-bit embedded microprocessor portfolio. 

By the Numbers 

  • Net Sales Fell 24.9% QOQ and 40.6% YOY. 
  • Analog Net Sales Were Down 15.2% and Represented 26.4% of Overall Revenue. 
  • Fiscal Year FPGA Revenue Exceeded $679M, Setting a New Record as Profits Grew 22% YOY. 
  • February Bookings Were the Highest in Eight Months. March Bookings Were the Highest in All of Fiscal 2024, and April Bookings Were Higher Than March. 
  • Average Lead Times Are Eight Weeks or Less. 
  • Days of Inventory Increased by 39 Days QOQ. 

 

Monolithic Power Systems Inc. (MPS) – May 1, 2024 

Key Takeaways 

  • Despite Uptick in Order Volume, Customers Remain Cautious. 
  • Revenue Increased QOQ and YOY. 
  • Vertical Power and Power Management for AI Represent Largest Growth Opportunity. 
  • Seasonal Weakness and Limited Visibility Lead to Modest Forecasts for Q2 and Q4. 

Ordering Patterns Rise, Leading to Increase in Revenue Both YOY and QOQ  

Revenue increased sequentially and on a YOY basis as ordering patterns consistently trended upward through the quarter. Amidst a downturn in the market, MPS saw share gains across various markets, including volatile sectors like industrial, servers, notebooks, and consumer electronics. Enterprise computing was the most robust market segment overall. 

Within AI, MPS saw customers transition to vertical power, particularly those that run computations or learning above 700 watts. Customers maintaining less extensive AI applications and, therefore, lower power ranges are still using traditional rack powers. 

Limited Visibility Leads to Forecasting Challenges 

There are greenfield opportunities in communications and industrial segments, marking these as areas for potential share gains moving forward. The company also discussed the impact of lower power management content in next-generation AI data centers due to liquid cooling and other advancing technologies. Should these cooling and new power systems gain traction, MPS stands to see profitability grow as it transitions with market trends to support new systems.  

While order patterns have improved, MPS has limited visibility into developments in the second half of the year, which introduces forecasting challenges. This difficulty, combined with traditional seasonal weakness patterns, is why the company expects only modest sequential growth between Q2 and Q4. 

 

Qorvo, Inc – May 1, 2024 

Key Takeaways 

  • Qorvo Successfully Reduced Its Net Inventory Balance. 
  • The Defense Sector Saw Strong Demand, Which is Set to Continue. 
  • The Industrial and Power Management Sector Expanded, With Design Wins in Power Management for Motor Controls and Power Tools. 
  • Qorvo Expects QOQ Revenue Growth, Driven by Defense. 

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 

  • Quarterly Revenue Increased by 49% YOY. 
  • Net Inventory Balance Decreased by $16M, Down to $711M. 
  • HPA Revenue Grew by 24% YOY. 
  • ACG Revenue Grew by 56% YOY. 
  • CSG Revenue Grew by 50% YOY. 

 

Wolfspeed, Inc – May 1, 2024 

Key Takeaways 

  • Wolfspeed Increases Silicon Carbide Production, Targeting Electric Vehicle (EV) Sector. 
  • Demand Weakness Instigates Plans to Shift Production from Industrial and Energy to EVs. 
  • Industry Disruptions Reportedly Will Not Impact Meeting Demand for Silicon Carbide. 
  • Initial Phase for JP Facility Scheduled to Conclude in 2024, Causing a Significant Reduction in 2025 CapEx. 

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 

  • EV Device Revenue Grew 48% YOY. 
  • Inventory On Hand Grew 213 Days. 
  • CapEx to Drop from $800M to $600M. 
  • Materials Revenue Set New Record for Second Highest Quarterly Profits at $99M. 
  • Mohawk Valley targeting at least 25% wafer starts and potentially $2B in annual device revenue.

 

Qualcomm Incorporated – May 1, 2024 

Key Takeaways 

  • Expanding Adoption of AI Chipsets Fuels Demand for Premium-Tier Smartphones. 
  • Snapdragon 8 Gen 3 Flagship Platform Performs Well in Chinese Market. 
  • AI Diversification Drives Profits for Industrial, Automotive, and Networking Segments. 
  • QOQ Decline Expected Due to Seasonal Trends and Absence of Flagship Handset Launch. 

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 

  • QCT Revenue was $8B This Past Quarter. 
  • QCT IoT, Which Focuses on Developing and Marketing Semiconductor Products and Solutions, Saw Revenue Increase 9% QOQ to $1.2B. 
  • QCT Automotive Revenue Increased 35% YOY. 
  • Revenue Forecasts Indicate Qualcomm Profits Will Range Between $8.8B to $9.6B. 

 

Samsung Electronics Co. – April 30, 2024 

Key Takeaways 

  • Generative AI Fueled Shift Towards Supporting High Bandwidth Memory (HBM) and Server Solid State Drive (SSD) Production. 
  • Average Selling Prices (ASPs) for DRAM and NAND Increased, Exceeding Market Expectations. 
  • The Focus on High-Value-Added Products, Rather Than Bit Shipment Growth, Allowed Samsung to Enhance Profitability. 
  • Samsung Expects Supply Constraints for Advanced Dram Processes Due to Production Capacity Focusing on HBM. 

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 

  • ASPs for DRAM and NAND Increased 20% and 30%, Respectively.  
  • DRAM Bit Growth Declined in The Mid-10% Range.
  • NAND Bit Growth Declined in The Low Single-Digit Range.
  • Upcoming DRAM Bit Growth Expectation Is in The Low to Mid- to High Single-Digit Range. 

 

Advanced Micro Devices Inc (AMD) – April 30, 2024 

Key Takeaways 

  • Revenue Driven by the Expansion of Data Center Business and AI Capabilities. 
  • The Client Segment Saw an 85% YOY Revenue Increase, Fueled by Ryzen Mobile and Desktop Processor Demand. 
  • Embedded Segment’s Revenue Dropped 46% YOY Due To Lower Communication, Industrial, and Automotive Sector Demand. 
  • Low Demand Caused Significant Declines in Gaming Segment. 

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 

  • Revenue was $5.5B, up QOQ. 
  • Client Segment Revenue Increased 85% YOY to $1.4B. 
  • Embedded Segment Revenue Declined 46% YOY to $846M.
  • Inventory Increased $301M to $4.7B.
  • AMD raised its revenue outlook for data center GPU from $3.5B to over $4B.

 

Skyworks Solutions Inc. – April 30, 2024 

Key Takeaways 

  • Mobile Business Declined Significantly, but Forecasts Indicate Demand Reached a Turning Point. 
  • Skyworks anticipates a continued recovery throughout 2024, with a focus on expanding its portfolio for the edge IoT market. 
  • Infrastructure and automotive may still experience weakness.
  • AI Advancements Are Expected To Bolster the Smartphone Replacement Cycle. 

Mobile Business Takes a Turn as End-Market Demand Falls Below Expectations 

This past quarter, mobile business was below typical seasonal trends, as end-market demand was less than anticipated. Regarding broad market results, Skyworks believes demand has reached a turning point, as it has largely returned to modest growth. Wireless infrastructure and traditional data center markets remained soft.  

The company plans to continue under shipping compared to natural demand to allow the distribution channel and customers to consume excess inventories. Despite these attempts to balance demand with supply, automotive and industrial markets undergo a steep inventory correction. 

Focus on Edge IoT to Contribute to Recovery 

The pace of recovery will continue throughout 2024, although markets like infrastructure and automotive will still experience some weakness. Skyworks also has a solid Wi-Fi 64 and Wi-Fi 7 design win pipeline to expand its portfolio for the edge IoT market. The company noted that the market is beginning a multiyear upgrade cycle, and mainstream models will start rolling out through the coming quarters. However, mobile business will decline sequentially as customers work through excess. 

Despite near-term headwinds, Skyworks remains optimistic about the role of AI in driving upgrades to Ethernet switches and optical modules. The increasing focus of automotive OEMs on software-defined vehicles and the potential for AI to drive connectivity demand across multiple segments further underscores the company's growth prospects. This is exemplified by the industry mandates and regulatory tailwinds that are increasing the demand for radios and antennas to support various communication standards, including 5G cellular, Bluetooth, Wi-Fi, ultra-wideband, NFC, and CV2X. 

Furthermore, AI will bolster the smartphone replacement cycle as real-time language translation, voice assistance, advanced camera and imaging, and on-device personalization applications become available on the latest models. 

By the Numbers 

  • Total Revenue was $1.046B. 
  • Mobile Revenue Declined 19% QOQ. 
  • Broad Market Revenue Increased by 1% QOQ. 
  • Next Quarter Revenue Forecasts $900M in Profits. 

 

Lattice Semiconductor Co. – April 29, 2024 

Key Takeaways 

  • Industrial and Automotive Sectors Experience Declines Due To Soft Demand and Inventory Reduction. 
  • AI Advancements Drive Market Expansion. 
  • Telecom Remains Weak and Expected to Continue Declining. 
  • New Products Hope to Lead Profitability as Lattice Continues its Largest Product Portfolio Expansion to Date. 

Industrial and Automotive Decline Amid Server Content Growth Surge 

Industrial and automotive demand declined due to soft demand and customers reducing inventory levels. The communications and computing segment also declined sequentially, but within that, computing improved due to solid server product demand.  

Traction within AI-related applications continues to advance, particularly with hardware and software solutions for running AI inference algorithms, which provide features like user presence and gaze detection. Another in-demand application has been control management and security of AI computing systems. 

The server content growth in the current generation has surged by an impressive 50%, representing a substantial increase from the previous generation. This trend is notably evident in cutting-edge processors such as Intel's Sapphire Rapids CPU and AMD's latest general CPUs, which are seeing significant adoption and traction in the market. 

Furthermore, Lattice announced seven Nexus device families, with six already in production. Within the company’s mid-range FPGA portfolio, the company introduced three Avant device families. The first family, Avant-E, started generating revenue by the end of 2023, and revenue growth is expected throughout this year and beyond. 

As Avant applications expand, Lattice expects further industrial usage in automation robotics, automotive applications, and automotive ADAS systems. 

Telecom Sector Faces Weakness, Product Ramps Aim for Profitability 

The fluctuations in demand, combined with ongoing inventory normalization efforts, will cause revenue to decline sequentially. In particular, the communication market is the softest because of weaker telecommunications infrastructure deployments. 

In terms of reaching the bottom of the cycle within telecom infrastructure, that trend will depend on improvements in larger telecom customers’ CapEx spending. In the interim, revenue in this market will continue to decline. 

Added strength in subsegments like healthcare, aerospace, and defense will help offset the weakness in communication. Automotive is a smaller subsegment, but there has been some incremental weakness. 

Within the AI segment, Lattice agreed to provide products designed into new Dell Latitude systems, which will boost profitability. Compute demand is continually increasing thanks to server demand driving revenue.  

ASPs related to FPGA servers will continue expanding. In the FPGA product portfolio, the second and third families, Avant-G and X, are anticipated to generate revenue later this year and increase in subsequent years. Lattice hopes that the FPGA market will reach the bottom of its cycle in terms of inventory burn and returning to profitability in the second half of the year, but it will be a gradual return. 

Despite these mixed trends, the year's second half will prove more profitable than the first half thanks to improving end market conditions and excess supply digestion, combined with new Nexus and Avant products. The seventh edition of the Nexus device family will begin production in Q3.  

By the Numbers 

  • Q1 Revenue was $140.8M, Down 17.5% QOQ and 24% YOY. 
  • Industrial and Automotive Segment Declined 25% QOQ. 
  • Communications and Computing Segment Declined 7% QOQ. 
  • European Market Demand Was Weaker than Overall Company Revenue. 
  • Server Content Growth in Lattice’s Current Generation of Products Surged by 50%. 
  • Q2 Revenue Will Be Between $120M - $140M. 

 

Sanmina Corporation – April 29, 2024 

Key Takeaways 

  • Sanmina Taps Into AI Demand, Driving Cloud Network Upgrades and Augmented Reality Traffic. 
  • Communication Cloud Segment Faced Supply Chain and Test Capacity Issues, Causing Shipment Delays. 
  • Communication Cloud Segment Saw a 36% YoY Decline Due to Inventory Adjustments and Reduced Demand. 
  • Sanmina Expects Communication Cloud Market To Stabilize, With Gradual Recovery in Q3 and Q4. 

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 

  • Inventory Declined $1.38B as Inventory Turns Increased 4.8% QOQ. 
  • Communication Cloud Segment Revenue Dropped 36% YOY. 
  • Industrial, Medical, Defense, Aerospace, and Automotive Accounted for 67% of Revenue, a 2.5% QOQ Dip. 
  • Communication and Cloud Segment Contributed 33% of Revenue, Split Evenly Between Communication and Cloud Customers. 

 

ON Semiconductor Co. (onsemi) – April 29, 2024 

Key Takeaways 

  • AI Applications Gain Momentum in Healthcare and Data Center Server Racks. 
  • Automotive Demand Shifts to High Resolution Image Sensors for ADAS Systems, Inventory Digestion Remains a Challenge. 
  • Silicon Carbide Market Expected to Double. 
  • Tailwinds Stem from Silicon Carbide and IGBT Demand in EV Market. 

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 

  • 50% of Over-The-Counter Hearing Aids Utilize Onsemi’s AI Technology. 
  • Onsemi Expects a 22% Compound Annual Growth Rate (CAGR) in the Cloud and Data Center Market Over the Next Five Years. 
  • 2X Market Growth in Silicon Carbide Revenue Is Anticipated for Onsemi in 2024. 
  • Days of Inventory Rose by 15 Days and Distribution Inventory Is at Eight Weeks, Verses 7.2 Weeks in Q4. 

 

NXP Semiconductor N.V. – April 29, 2024 

Key Takeaways. 

  • Industrial and IoT Markets Showed Steady QOQ Growth Thanks to Strict Inventory Management Amidst Cyclical Demand Headwinds. 
  • Automotive Revenue Declined Due To Excess Supply Amongst Tier 1 Customers. 
  • Automotive Revenue Will Continue to Drop QOQ, Reflecting Ongoing Inventory Digestion and a Softer Macro Environment. 
  • Restocking in the Second Half of 2024 to Help Normalize Inventory Across Markets. 

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 

  • Q1 Revenue was $3.13B. Q2 Revenue Is Projected at $3.125B. 
  • NXP Had 144 Days of Internal Inventory, 1.6 Months of Distribution Channel Inventory, and a Cash Conversion Cycle of 105 Days. 
  • Automotive Revenue Declined 1% YOY, Industrial and IoT Increased 14% YOY, Mobile Increased 34% YOY, While Communication Infrastructure & Other Revenue Dropped 25% YOY. 
  • NXP Forecasts $3.125B for Next Quarter, a 5% YOY Decline and Flat QOQ. 
  • NXP Plans to Increase Distribution Inventory to 1.7 Months This Quarter. 

 

STMicroelectronics N.V. (STM) – April 29, 2024 

Key Takeaways 

  • Automotive and Industrial Revenue Declined Significantly.  
  • Industrial Market to Continue Digesting Inventory Throughout 2024. 
  • STM Is Expanding Mems Sensor Portfolio to Capture Edge AI Demand. 
  • Due to Industrial Market Weakness, STM May Adjust Pricing and Product Offerings. 

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 

  • Automotive Customer Demand for Analog Products, Mems, and Sensors Dropped 10%. 
  • Industrial Declined More Than 40% YOY and Dipped 28% QOQ. 
  • The Industrial MCU Market Is Expected To Decrease by 30%. 

 

Renesas Electronics Corporation – April 25, 2024 

Key Takeaways 

  • Days of Inventory Increased Due to a Buildup of Work-In-Progress Inventory From Proactive Purchase Orders. 
  • AI and DDR5 Transitions Are Driving Growth in Data Center and Infrastructure Businesses, Contributing To Significant Revenue Increases. 
  • Industrial and Infrastructure IoT Segments Are Grappling With a Slowdown, Presenting a Mixed Bag of Market Conditions. 
  • Foundry and Capacity Trends Show Minimal Dramatic Changes in Raw Material Costs, With Production Adjustments During Summer Due to Holidays. 

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 

  • Inventory Increased to 101 Days. 
  • 20% to 30% of the Company’s Sales Are to China, With Approximately 6% Contribution To Total Company Revenue, Meaning Renesas Is Less Exposed to Market Pressure in This Area. 
  • AI-Related Products Contribute Single-Digit Percentages to Total Sales.
  • 4-Year Growth Is Anticipated in the Automotive Segment, While the Industrial Infrastructure IoT Sector May Take Longer To Recover.

 

Intel Corporation – April 25, 2024 

Key Takeaways 

  • Momentum Around the Gaudi Accelerator Series Is Growing, With Over 20 Customers Adopting Gaudi 2 and 3. 
  • Intel Launched the Open Platform for Enterprise AI Project To Accelerate GenAI Deployments, Which Focuses on Retrieval Augmented Generation (RAG). 
  • PC Market Slowly Improving and Expected to Grow Further Thanks to Corporate Refresh in Second Half of 2024. 
  • Data Center and Foundry Business Is Steadily Increasing. 

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 

  • 40 Million AI PC CPUs Are Expected to Ship in 2024. 
  • $500M in Accelerated Revenue Is Expected in the Second Half of 2024. 
  • Nearly 50 Test Chips Are in Intel’s Pipeline, With Growing Interest in Intel 18A. 
  • The Foundry Market Is Expected To Grow From $110B Today to $240B by 2030. 
  • Sierra Forest Offers 144 to 288 Cores, Focused on Power, Performance, and Efficiency. 

 

Western Digital Co.  – April 25, 2024 

Key Takeaways 

  • Disciplined Spending Created a Tighter Market as Demand Recovered Across All End Markets. 
  • Flash-Based Solutions Average Selling Prices (ASPs) Increased Alongside Demand. 
  • Improved Pricing Environment Offset the Ongoing Decline in Consumer HDD Demand. 
  • Demand for NVMe SSDs Is Rising Again, Driven by AI Applications, Creating a Positive Outlook.  
  • The Recovery in Cloud Demand and the AI Adoption Trend Are Likely To Propel Ongoing Growth. 

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 

  • Third Quarter Inventory Was Flat From the Prior Quarter at $3.2B, With Days of Inventory Increasing Four Days to 119 Days. 
  • Consumer Market Saw 17% Revenue Growth YOY, Based on SanDisk Premium Brand Results.
  • Client Segment Revenue Grew by 20% YOY. 

 

Silicon Laboratories Inc. – April 24, 2024 

Key Takeaways 

  • Q1 Revenue Indicates Recovery From the Previous Quarter. 
  • The Company’s New Series 2 Platform, Featuring AI/ML Capabilities, Gained Traction. 
  • Inventory Levels in the Distribution Channel Decreased Significantly. 
  • Focus Pivots to Improving Order Visibility and Maintaining Strategic Die Bank Inventory. 

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. 

By the Numbers 

  • Q1 Revenue was $106M, up 23% QOQ. 
  • Channel Inventory, on a Unit Basis, Decreased Almost 25% QOQ and 50% YOY. 
  • Internal Inventory Increased Slightly to $198M. 
  • Revenue for Q2 Will Be Between $135M - $145M. 

 

MaxLinear, Inc. – April 24, 2024 

Key Takeaways 

  • Maxlinear’s 5G Wireless Infrastructure Business Continues To Grow. 
  • The Revenue Guidance for Q2 Reflects Uncertainty in Market Trends. 
  • Connectivity, and Industrial Multi-Market Revenues To Increase, Broadband Revenue May Decline. 
  • Optical Data Center Interconnect, 5G Wireless, and WiFi Connectivity Identified as High-Growth Markets. 

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. 

By the Numbers 

  • Total Revenue for the First Quarter Was $95.3M. 
  • Broadband Revenue Was $33M. 
  • Connectivity Revenue Was $10M. 
  • Infrastructure Revenue Was $33M. 
  • Industrial Multi-Market Revenue Was $20M. 
  • Q2 Revenue Forecasted to Be Between $90M - $110M. 

 

Seagate Technology Holdings – April 23, 2024 

Key Takeaways 

  • Seagate’s Q1 Revenue Grew Due to a Rise in Nearline Cloud Demand From Both U.S. And China-Based Customers. 
  • The Video, Image, and Analytics (VIA) Markets Experienced Lower Seasonal Revenue. 
  • Revenue Is Expected To Continue Increasing Next Quarter With Growing Demand for Nearline Cloud Products and Moderate Improvements in Nearline Enterprise and VIA Markets. 
  • Seagate Anticipates Healthy Nearline Demand Growth Throughout the Year, Driven by AI-Generated Content and Server Growth. 

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 

  • Revenue in the March Quarter Grew by 6%. 
  • Cloud Demand, Both in the U.S. and Globally, Saw Strong Double-Digit Revenue Growth. 
  • Revenue Will Increase 12% QOQ and 16 YOY. 

 

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

Key Takeaways 

  • Revenue in the First Quarter Declined Due To Weak Demand Across All End Markets, Which Contributing To Lower Order Volume. 
  • Increased Inventory Levels on Both the Manufacturer and Customer Sides Further Impacted Q1 Demand, Indicating a Slowdown in Order Intake. 
  • TI Expects Only a Marginal Decline in Revenue for Q2, Anticipating a Slight Increase in Order Volume as Certain End Markets Begin To Recover From the Inventory Digestion Cycle. 
  • Long-Term, Ti Is Investing in Competitive Advantages Like Manufacturing and Technology. 

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. 

By the Numbers 

  • Q1 Revenue Declined 10% QOQ and 16% YOY. 
  • Communications Equipment Revenue Declined 25% Last Quarter.
  • Total Amount of Inventory Increased by $84M, and Inventory Days Increased by 16 Days QOQ. 

 

Taiwan Semiconductor Manufacturing Co. (TSMC) – April 15, 2024 

Key Takeaways 

  • TSMC Demonstrated Resilience in Q1 2024 by Recovering Quickly From a Major Earthquake in Taiwan. 
  • Q1 Revenue Slightly Exceeded Guidance, Driven by Demand for High-Performance Computing (HPC) Applications and Technologies. 
  • The Semiconductor Market, Excluding Memory, Is Expected to Experience a Slower, More Gradual Recovery Following the Inventory Corrections of 2023. 
  • Emphasis on Advanced Technology at Scale, Such as 3-Nanometer and 5-Nanometer Technologies, Is Expected To Drive Stronger Business Performance in the Second Half of the Year. 

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 

  • Second Quarter Gross Margin Expected to Decline by 1.1 Percentage Points to 52% at the Midpoint. 
  • 2024 Capital Budget Expected To Be Between $28B - $32B. 
  • Strategy To Convert Some 5-Nanometer Tools To Support 3-Nanometer Capacity Expected To Dilute Gross Margin by About 1 to 2 Percentage Points in the Second Half of 2024.
About Fusion Worldwide

Fusion Worldwide is the preeminent open market distributor of electronic components and products. We source, inspect, test, and deliver a broad range of components to a large and diversified customer base that includes OEMs, CMs and ODMs across a wide array of verticals. Founded in 2001, Fusion is headquartered in Portsmouth, New Hampshire and maintains offices and quality centers in major manufacturing centers around the world. For more information visit fusionww.com, or follow Fusion Worldwide on LinkedIn, Instagram, WeChat, and X.

About Prosemi

Founded in 1998, Prosemi is Singapore's most extensive testing and assembly house, offering comprehensive electronic component quality testing solutions for the world's largest distributors, CMs, ODMs, and OEMs. A subsidiary of Fusion Worldwide, Prosemi is an ISO/IEC 17025 AS6171 accredited laboratory that uses cutting-edge technology to provide customizable solutions. For more information visit prosemi.com.sg, or follow Prosemi on LinkedIn, WeChat, and X.

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