Image source @Visual China
Recently, Huawei founder Ren Zhengfei said in an article that global economy will face recession and decline in consumption capacity. 2023 and 2024 are Huawei's respite periods. In the future, the entire company will take "survival" as its main program. "The world's economy will not be able to improve in the next 3 to 5 years."
Ren Zhengfei's "cold theory" has sparked heated discussion on the Chinese Internet. At the same time, this "cold" also spread to the "three chip giants" in the United States - Intel , AMD , and Nvidia.
In late August, US chip giant NVIDIA (NASDAQ:NVDA) released its second quarter financial report for the 2023 fiscal year ended July 31 this year, showing that NVIDIA's revenue in the quarter reached US$6.704 billion, a year-on-year increase of only 3%; net profit was US$1.292 billion, a year-on-year decrease of 51%. Among them, the graphics card that was once speculated on sky-high price GPU (graphics processor) has even dropped by in volume and price. It has contributed nearly half of its revenue to Nvidia for a long time, a year-on-year decline of 33%.
is unique. Intel (NASDAQ: INTC) and AMD Corporation (NASDAQ: AMD) have also announced their latest quarterly results in the past month. Among them, Intel's second-quarter revenue plummeted 22% year-on-year, while non-GAAP revenue fell 17% year-on-year, and net profit turned from profit to loss; and AMD also predicted signs of slowing growth in the third quarter.
When the cold air hits, how American chip giants solve short-term interests and long-term development seems to have become an important topic that we need to pay attention to at the moment.
3 chip stocks are polarized: Intel loses share, AMD is underestimated
The market's concerns about a global economic recession have exacerbated the forecast of a decline in global chip sales.
The World Semiconductor Trade Statistics Organization (WSTS), a non-profit organization that tracks chip shipments, predicts that the chip market growth forecast this year will be lowered from 16.3% to 13.9%, but the trade scale will still exceed US$600 billion. At the same time, chip sales will only increase by 4.6% in 2023, and the growth rate will hit the lowest since 2019.
At present, the global economic recession is showing signs of a global recession, competition for chips in various countries intensifies, fierce inflation erodes consumers' purchasing power, and sales of smartphones and PCs have also slowed down. The demand for chips for CPU (central processor) and GPU (graphics processor) has decreased. At the same time, multiple economies hikes interest rates are threatening global economic growth and making companies more cautious about capital expenditures. This is the fundamental reason for the slowdown in performance growth of the three chip companies and the decline in profits.
Specifically, the performance developments of these three chip giants in the second quarter are very different. A data released by
Ycharts shows that the annual revenue growth trend of the three chip stocks showed signs of polarization - Nvidia and AMD grew rapidly at a rate of more than 140%; Intel slowed down at a growth rate of 9.81%, lost market share, lowered expectations guidance, becoming the company with the least growth and lowest market value among the three companies, lower than Wall Street's expectations.
Among them, Intel 's second-quarter financial performance was lower than market expectations, and revenue and profit both fell: revenue in the second quarter was US$15.321 billion, a year-on-year decrease of 22%; net loss was US$454 million, compared with net profit in the same period last year of US$5.061 billion, a year-on-year decrease of 109%; diluted loss per share was US$0.11, a year-on-year decrease of 109%.
market research agency IDCh data shows that in the second quarter of 2022, global PC shipments fell by 15.3% year-on-year, totaling 71.3 million units. The PC chip business has contributed more than half of Intel's revenue for a long time. In the second quarter of 2022, Intel's PC chip business revenue was US$7.7 billion, a year-on-year decline of 25%.
and AMD (ultramicro semiconductor) revenue in the second quarter was slightly better, but its profit was still very low. Thanks to factors such as the performance consolidation of Xilinx, AMD's revenue in the second quarter reached US$6.6 billion, with increasing 70% year-on-year; net profit was US$447 million, a year-on-year decrease of 37%; earnings per share was US$0.27, a year-on-year decrease of 53%. But AMD expects revenue to reach around $6.7 billion in Q3, lower than analysts' average expectations.
Nvidia's revenue growth is slightly better than AMD's company, and it is also the most expensive of the three chip stocks. This is mainly due to the growth in demand for computing power . The fields of gaming, crypto mining, AI and cloud computing are very needed to bring performance changes, making Nvidia a "hot cake" in the capital market, with a very high market value - second only to TSMC, and is the second largest chip stock in the world.
financial report shows that as of the 2022 fiscal year ended January 30, 2022, Nvidia's annual revenue hit a record of US$26.91 billion, a year-on-year increase of 61%; non-GAAP diluted earnings per share for the whole year was US$4.44, a year-on-year increase of 78%.
However, analyst Jonathan Weber said in an article that Nvidia's valuation can be said to be ridiculously high, with a stock price of 50 times the expected net profit this year and a price-to-earnings ratio as high as 31 times. Compared with AMD, Nvidia's trading price has a premium of for more than 100%, which is not reasonable. He believes that Nvidia's stock price will enter a period of decline next, while AMD is undervalued and will see rapid growth in the future, with a current price-to-earnings ratio of about 18 times.
From the perspective of performance, AMD's revenue in the second quarter increased by more than 70% year-on-year. It is expected that revenue will reach US$12.4 billion in the first half of this year, and its annual revenue is expected to reach US$26.3 billion.
This means that compared with Nvidia and Intel, AMD's revenue in the second half of the year should be around US$14 billion, a month-on-month increase of more than 10%, while the other two companies will not experience double-digit growth in the second half of the year. But this premise is that AMD will not be affected by factors such as the epidemic and market changes in the second half of the year. Because Nvidia has predicted that its third-quarter revenue will be approximately US$5.9 billion, lower than market expectations, and said sales will fall by 17% year-on-year.
Changes in market value (stock price) of Nvidia and AMD
html On August 31, data released by Jon Peddie Research showed that in the second quarter of 2022, independent and integrated GPU sales fell by 14.9% month-on-month. Among them, Nvidia GPU sales fell by 25.7% month-on-month, AMD fell by 7.6%, and Intel fell by 9.8%. Sales are expected to continue to decline in the third quarter.Cold air is coming, and the three giants save themselves and perform their own performance
As we all know, chip semiconductors are a very strong cyclical track, which requires long-term R&D investment and a global supply chain system.
However, investors in the capital market are more concerned about the short-term interests of the company. For example, although AMD gives investors a total of US$300 billion in market opportunities in the next five years, including data centers, games, smart driving, etc., stocks have not seen a big rise.
When the consumer electronics market is weak and the growth of cloud and data centers slows down, and the short-term "cold" hit, Nvidia, AMD, and Intel, the "three giants of chips" in the United States, began to save themselves: continued activeness and complementary cooperation between companies.
htmlOn August 30, AMD launched the AMD Ryzen 7000 series CPU chip in the United States, built on TSMC's 5nm process nodes and adopts the Zen 4 architecture. Compared with the previous generation of Zen 3, the single-threaded performance is 29% higher, and the multi-threaded performance is 35%. Compared with Intel's 13th-generation Core series CPUs, the new AMD model has been released much earlier, and it has become the first 5nm CPU chip product. At the press conference, AMD announced the Zen architecture roadmap. According to the roadmap, in 2024, AMD will release the Zen 5 architecture processor chip using the 4nm/3nm process. Althoughdid not launch new products, Intel was not idle either. On August 23, local time, US chip giant Intel announced that it has signed an agreement with Canadian asset management company Brookfield. The two parties will jointly provide investments of up to US$30 billion for Intel's two new wafer factories. The transaction is expected to be completed before the end of 2022. Intel will invest 51%, Brookfield will invest 49%, and Intel will hold stake in and operate two wafer factories.
At the same time, the " Chip and Science Act " signed by US President Biden came into effect last Thursday (25th), the bill includes support policies such as $52.7 billion in subsidies to the chip industry, a 25% investment tax credit for semiconductors and equipment manufacturing, and R&D investment in wireless broadband technology. Intel CFO David Zinsner said Intel is continuing to seek cooperation with local and U.S. federal governments.
According to previous reports from the US technology media, Intel is lobbying for the Biden administration, hoping to obtain up to one-third of the fund subsidy support from $52.7 billion, which is estimated to be about $17.6 billion.
According to a roadmap obtained by Titanium Media App, in 2023, Intel GPU products will be produced using TSMC 5nm (N5) process, SoC Tile and IOE Tile will be produced using TSMC 6nm (N6) technology nodes, and CPU will be Intel 4 nodes. Therefore, this means that Intel's factories in the United States will not produce the most advanced processes in the short term, and it is expected that the process will be up to 14nm, and advanced chips will be transferred to TSMC for production.
In addition, in order to save performance, companies have also launched complementary cooperation.
Among them, Nvidia and Ampere Computing jointly announced the launch of an AICAN cloud server technology platform. Earlier, Intel announced that it would start chip foundry cooperation with MediaTek ; Qualcomm announced that it would reach a cooperation with Samsung to mount Qualcomm Snapdragon mobile chip to Samsung Galaxy mobile phones.
Overall, with the development of data centers and PC gaming fields and the continuous expansion of computing power demand, the chip semiconductor market will have a significant growth trend in the long run. In terms of the CPU and GPU market alone, AMD and Intel have slightly lower GPU market share than Nvidia, while Intel still dominates the data center server CPU, but the growth rate has slowed down and AMD is eroding its share.
Take cars as an example. Tesla Model S and Model X are equipped with AMD Ryzen embedded APU and RDNA-2 GPU respectively. Intel's mobileye's autonomous driving product has also been seized by NVIDIA Orin.
Wang Rui, senior vice president of Intel and chairman of Intel China, told Titanium Media App last year that although they were behind in the process in the past few years, they actively caught up with each other, hoping to surpass AMD and Nvidia, regain the favor of customers and market advantages. "Intel is confident that we can win back customers like , Apple, ."
So, what are the development and changes of the "three chips" in the United States to China?
In fact, as a popular track in the chip industry R&D, China is constantly increasing its research and development of next-generation computing chip products such as CPU, GPU, FPGA, etc., to become "China Nvidia", "China Xilinx", and "China Intel". Companies including Tianshu Intel, Suyuan Technology, Biren Technology and other companies are gradually commercialized, with Biren's valuation as high as 15 billion yuan.
If the news of the United States cut off supply of high-performance GPU chips to China is true, it will benefit the entire domestic CPU/GPU chip design companies and the large chip industry, and Americans force Chinese customers to use domestic GPUs.
However, the challenge still exists. Since this type of chip track has begun to pursue the advanced process technology , and the highest process in mainland China is 14nm, the CPU/GPU has long relied on TSMC's process. In addition, the proportion of CPU computing resources is currently very low, less than 0.1%; the resource utilization rate of FPGA hardware is less than 5%; the energy consumption of GPU data transmission is as high as more than 90%. Existing computing chips are difficult to meet the requirements of next-generation computing.
"If you want to complete supercomputing, the energy consumption is 8,000 megawatts, while Beijing will be 25,000 megawatts in 2021. It will use 1/3 of Beijing's electricity and spend 4 trillion yuan. China will have 115 trillion GDP all year round, which is to build a computer using about 2% to 3% of the country's GDP, which is very costly. Therefore, it is very difficult for the whole world to overcome the next generation of computers." Wei Shaojun, professor of , Tsinghua University, said at an event on the 30th that the current performance gap between 14nm and the internationally advanced 3nm process is about 10 times, which is a major challenge we face.
Wei Shaojun emphasized that in the process of development, China must re-examine this year's chip architecture, and chip architecture innovation will become one of the important tasks. China's integrated circuit design industry has achieved certain results and has a considerable industrial scale. In the next stage, it has gradually achieved such a development process from catching up to running side by side and gradually achieved leading the way in some fields.
But now, the R&D investment of Chinese chip companies is seriously insufficient. "We need government support and talents. If we don't have investment, we still cannot do it... So in R&D investment, it is not only the central responsibility, but also the entrepreneur's responsibility. I hope local governments can also help each other." Wei Shaojun called on China at this year's Wuxi ICDIA conference that China should increase its support for R&D investment in semiconductor companies. (This article was first published on Titanium Media App, author | Lin Zhijia)
