The Current State of Semiconductor Supply in the Automotive Industry
The automotive end market is experiencing a slowdown, as semiconductor content rises in vehicles but supply has managed to catch up with demand. Shorter lead times, growing inventory, higher interest rates, and escalating sticker prices are contributing to a deceleration in demand. Analyst Kevin Cassidy pointed out that this sluggish demand environment is persisting.
Expectations and Insights from CES
Cassidy anticipates gaining insights into the current automotive market at CES this week. Scheduled meetings with companies holding automotive exposure, including Ambarella, Innoviz, Navitas, onsemi, Qualcomm, and Synaptics, are expected to shed light on the prevailing conditions.
Developments in Virtual Reality and Artificial Intelligence
Qualcomm Inc has been actively updating its Snapdragon XR Platform, positioning itself as a leader in virtual reality SoCs. Cassidy highlighted Qualcomm’s competitive advantage in terms of pricing, technology, and ecosystem support derived from years of high-volume production in handsets.
Forecasts and Market Projections
The virtual reality headset market is anticipated to gradually align with consumers’ needs over time. Additionally, Arm Holdings Plc’s strengthening pipeline for generative AI licenses bodes well for future market developments.
Impact on Semiconductor Companies
Monolithic Power Systems, Inc’s expanding pipeline of power analog solutions for Nvidia Corp’s current Hopper and next-generation Blackwell is expected to have significant implications for the company, indicating strategic relationships beyond Nvidia and substantial profitability impact.
Although the industrial and automotive segments may remain weak in the March quarter, other segments and AI momentum could offset these effects.
Market Dynamics and Potential Downside Risks
According to Cassidy, the industrial and automotive segments are currently in a downward trajectory, with a potential bottoming process anticipated in the first half of 2024. Companies such as Lattice Semiconductor Corp, Microchip Technology Inc, MPWR, and Texas Instruments Inc may experience some downside based on Cassidy’s analysis.
Insights on Advanced Micro Devices, Inc and Intel Corp
Cassidy also noted potential downside risks associated with the FPGA units of Advanced Micro Devices, Inc and Intel Corp, mentioning the appropriate timing of the Altera IPO spinoff by Intel in the next 2-3 years.
Intel is expected to make significant investments in reviving its roadmap after facing years of mismanagement, as per the analyst’s observations.
Anticipated Announcements at CES
Cassidy is eager to witness more real-world performance-proof points with integrated NPU functionality with AMD’s new Ryzen and the new Intel Meteor Lake. Anticipated releases and developments are expected to shape the industry landscape.
Implications on Apple Inc and Other Key Players
As Apple Inc has already transitioned to ARM CPUs in recent years, Cassidy foresees similar moves from players in the Windows world, including Qualcomm, Nvidia, AMD, and potentially Intel, driven by the prospects of incremental efficiency improvements and customer preference.
Ripples in the Semiconductor Industry
Further implications are expected in the data center space, with ARM gaining significant traction. Nvidia’s Jensen Huang is expected to showcase a deep portfolio of silicon solutions and highlight autonomous vehicles, robotics, and industrial digitalization at CES, providing insights into accelerated computing and emerging platforms.
The Future of Memory Cycle and AI Content Trends
Micron Technology, Inc is expected to provide incremental visibility on the memory cycle, AI content trends, and supply discipline for the industry at the event. Expectations are high for the HBM3 DDR5 transitions and other market developments.
Moreover, Marvell Technology, Inc’s AI-centered ramps in custom ASICs and networking AI adjacencies are anticipated to be key focal points.