KeyBanc analyst John Vinh has shared his observations on the semiconductor sector’s supply chain, revealing a mixed bag of news. While most end markets experienced weakness in the analog segment, Vinh notes that the automotive sector is showing signs of nearing a bottom. On the other hand, the traditional server and AI markets are demonstrating sustained strength, with Nvidia’s Blackwell chip set to launch in the fourth quarter without further delays.
Vinh’s assessment of the iPhone 16 launch suggests it performed better than anticipated but could still be improved. This analysis led him to downgrade Qualcomm Inc. (QCOM) and Synaptics Inc. (SYNA) to Sector Weight. He expects Qualcomm to lose market share to Mediatek in the mid-to-low-end segment of the smartphone market due to increased price competition. This challenge will be compounded by Apple’s ramp-up of its internal modem. The downgrade for Synaptics reflects its underperformance compared to its Internet of Things (IoT) peers. This is attributed to limited growth catalysts within its Enterprise & Automotive segment, which accounts for nearly 60% of its overall revenue and boasts the highest margins. Vinh also flags increased competition from local chipmaker HiSilicon in the Chinese market as an additional headwind for Synaptics.
Vinh’s findings paint a more positive picture for Nvidia Corp. (NVDA) and Advanced Micro Devices, Inc. (AMD). Nvidia’s Blackwell chip is expected to enter mass production in December, generating over $7 billion in revenue during the fourth quarter. Hopper demand remains robust, with fourth-quarter revenue projected to rise by approximately 15% sequentially. AMD’s positive catalysts include strong traditional server demand, an uptick in Genoa instances in the cloud, sustained demand for the MI300X GPU (anticipated to ship 500K units in 2024), and a potential update on its next-generation GPU and CPU at its AI event scheduled for Thursday.
Vinh also provided insights for Broadcom Inc. (AVGO), noting sustained networking demand fueled by improving traditional server demand, share gains from its 800Gb optical DSP launch, and an upward revision of CoWoS demand. However, Apple’s preparation of its Wi-Fi 7 radio for the iPhone 17 in 2025 could pose a potential downside for Broadcom.
For Micron Technology, Inc. (MU), Vinh highlights oversupply as Micron prompts Samsung to convert its unused HBM capacity back to traditional DRAM to stay competitive. Monolithic Power Systems, Inc. (MPWR) faces vulnerability due to increased return merchandise authorizations (RMAs) for Nvidia H100 AI servers. These RMAs are linked to field failures associated with Monolithic Power Systems’ power modules, impacting its market share on Blackwell. Vinh’s observations from Asia point to negative implications for Marvell Technology, Inc. (MRVL). The analyst believes Marvell is susceptible to market share loss stemming from the next-generation AWS Trainium 3 loss to Alchip, Google’s second-generation Axion ARM CPU, and Nvidia’s development of its 1.6T optical DSP.
Vinh’s insights from Asia also paint a negative picture for Intel Corp. (INTC). He highlights Intel’s server market share loss to AMD and the ramp-up of Blackwell as a headwind. Additionally, Intel’s lack of a cost-effective AI CPU targeted at the mass market AI PC segment is likely to result in a share loss for Intel. He also expresses disappointment with the feedback received on Intel’s AI chip Gaudi 3.
