In 2023, the semiconductor industry underwent an unprecedented and intense fluctuation, with the ever-changing market conditions forcing industry giants to remain vigilant at all times to address the emerging challenges and opportunities. Against this backdrop, the performance of global semiconductor giants has undoubtedly become a focal point of attention in the industry.

Can they maintain a leading position in the fierce market competition? Can they seize market opportunities to achieve rapid growth? And can they cope with various challenges and difficulties? These questions are all nerve-wracking for the entire semiconductor industry. Recently, various chip giants have announced their financial data for Q1 of 2024. So, how have these top global chip companies performed?

Before that, let's review the general situation of these chip giants in 2023.

01

Top 10 Global Semiconductor Manufacturers in 2023

In 2023, in addition to the poor performance of memory manufacturers, the ranking of the top 10 semiconductor manufacturers also changed compared to 2022.

According to the 2023 annual global semiconductor manufacturer revenue ranking released by the market research institution Gartner, Intel's semiconductor revenue in 2023 fell by 16.7% year-on-year to $48.66 billion, overtaking Samsung to return to the top spot for the first time in three years.

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Samsung, hindered by its memory chip business, saw its semiconductor revenue plummet by 37.5% to $39.9 billion in 2023, retreating to the second position.Qualcomm's revenue in 2023 also declined by 16.6% to $29 billion, ranking third (the same as in 2022).

Broadcom's revenue in 2023 grew by 7.2% year-on-year to $25.59 billion, jumping to fourth place (it was sixth in 2022).

NVIDIA's semiconductor revenue in 2023 also soared by 56.4% to $23.98 billion, rapidly rising from 12th place in 2022 to fifth, marking the first time in NVIDIA's history that it has entered the top five globally.

SK Hynix was also dragged down by its memory chip business in 2023, with revenue plummeting by 32.1% to $22.76 billion, dropping from fourth place in 2022 to sixth.

AMD's revenue slightly decreased by 5.6% year-on-year to $22.31 billion, maintaining its seventh place, the same as in 2022.

STMicroelectronics' revenue in 2023 was $17.06 billion, ranking eighth, improving by three positions compared to 2022.

Apple's semiconductor business revenue in 2023 was $17.05 billion, ranking ninth, the same as in 2022.

Texas Instruments' revenue in 2023 was $16.54 billion, ranking tenth, improving by two positions compared to 2022.

Gartner data shows that the total semiconductor revenue of the top 25 semiconductor manufacturers in 2023 decreased by 14.1%, accounting for 74.4% of the entire market, down from 77.2% in 2022.

However, Gartner also pointed out in its report that the demand for memory chips will show a strong recovery in 2024, with revenue estimated to surge by 66.3%. Among them, Flash Memory revenue is expected to surge by 49.6%, and DRAM revenue is expected to surge by 88%. So, in the just concluded Q1, what kind of report cards will these top semiconductor companies hand in? And what new trends will the entire semiconductor market display?Q1 Performance: Joy for Some, Woes for Others

Intel: Strong Client Computing Division, Revenue Growth of 31% Year-on-Year

Despite the complex and fiercely competitive global semiconductor market, Intel has achieved steady revenue growth through continuous innovation and optimization of its product portfolio.

Intel reported revenue of $12.7 billion for the first fiscal quarter of 2024, a year-on-year increase of 9%, mainly due to the strong performance of its Client Computing Division. Intel Products revenue reached $11.9 billion, a year-on-year increase of 17%, with the rebound in the personal computer market providing significant growth momentum for Intel. Revenue from this segment reached $7.5 billion, compared to $5.8 billion in the same period last year, a year-on-year increase of 31%. This achievement not only reflects Intel's deep accumulation in the personal computer market but also demonstrates its rapid response and adaptability in the face of market changes.

Samsung Electronics: Memory Chip Demand Rebound, Strong Sales of Galaxy S24 Smartphones

Samsung Electronics' preliminary operating profit for Q1 2024 is about 6.6 trillion won ($4.9 billion), a significant year-on-year increase of 931.3%. This figure is 20.5% higher than the average expected 5.37 trillion won by analysts at financial data company Yonhap Infomax, ending Samsung Electronics' consecutive quarterly decline that began in the third quarter of 2022. Samsung's profit surge is mainly attributed to the rebound in memory chip demand, an improvement in the key semiconductor division's business, and strong sales of the Galaxy S24 smartphones.

Qualcomm: Robust Recovery in the Chinese Market, Net Profit Growth of 37% Year-on-Year

After several quarters of sluggish performance, chip giant Qualcomm's results have also turned for the better. Qualcomm's performance for the second fiscal quarter of 2024 (ending March 24, 2024) far exceeded expectations, with net profit reaching $2.326 billion, a year-on-year increase of 37%, and revenue of $9.389 billion, a year-on-year increase of 1%.

The significant increase in Qualcomm's net profit for the second fiscal quarter is mainly due to the robust recovery in the Chinese market. Qualcomm stated that after last year's downturn in the smartphone market, the Chinese market has begun to recover, with a notable increase in demand from Chinese consumers for high-end devices integrated with AI chatbots. The company's sales to Chinese smartphone manufacturers increased by 40% in the first half of the fiscal year, which is a significant sign of market recovery.In terms of business performance, Qualcomm's revenue from mobile chip business increased by 1% year-over-year to $6.18 billion, which is lower than the 16% growth in the previous fiscal quarter; revenue from automotive chip business was $603 million, a 35% increase compared to $447 million in the same period last year; revenue from IoT business was $1.243 billion, an 11% decrease compared to $1.39 billion in the same period last year. However, both automotive and IoT chip revenues exceeded analysts' expectations.

Broadcom: Significant growth in AI business successfully offsets the decline in traditional business

In Broadcom's first quarter of the fiscal year 2024, which ended on February 4, 2024, net revenue increased by 34% year-over-year to $11.961 billion, exceeding analysts' forecast of $11.8 billion. Adjusted net profit was $5.25 billion, also higher than the expected $5.01 billion by analysts.

Among the five major businesses under Broadcom's semiconductor solutions, the revenue from network equipment business grew by 46%, thanks to the deployment of AI accelerators by large-scale customers. However, other businesses saw a comprehensive decline under the influence of cyclical demand slowdown, with server storage and broadband businesses experiencing a significant drop of 29% and 23%, respectively.

In the first quarter of the fiscal year 2024, Broadcom successfully offset the decline in traditional businesses such as mobile phones and servers through significant growth in AI business, maintaining the annual revenue expectation of $50 billion. Broadcom's top management expects these businesses to be going through a cyclical trough and predicts improvement will only come by the end of the year.

NVIDIA: Q1 revenue expected to be around $24 billion

According to NVIDIA's previously released performance guidance, the revenue for the first quarter of the fiscal year 2025 (2024) is expected to be around $24 billion, with a fluctuation of 2%. The sequential growth rate has slowed down, mainly due to the potential seasonal impact on the gaming business. The data center business is booming and has become the main driver of NVIDIA's performance in the fiscal year 2024.

SK Hynix: Storage chip market rebounds strongly, Q1 revenue surges 144.3% year-over-year

Benefiting from the AI-driven increase in demand for storage chips and the bottoming out of storage chip prices, SK Hynix's first-quarter revenue doubled, and profits set a record for the second-highest in the same month in history.

Specifically, SK Hynix's revenue for the first quarter of 2024 was 12.42 trillion won (about $9 billion), the highest for the same period in history, surging 144.3% year-over-year, the fastest growth rate since 2010; operating profit reached 2.88 trillion won (about $2.09 billion), far exceeding market expectations of 1.8 trillion won and setting a record for the second-highest in the same month in history, a stark contrast to the loss of 3.4 trillion won in the same period last year. The operating profit margin for the first quarter was 23%, the net profit margin was 15%, and the gross margin was 39%, all reaching recent highs.AMD: Q1 Performance Lackluster, No Signs of AI Chip Sales Acceleration

AMD's overall performance in Q1 2024 was rather lackluster, with quarterly revenue amounting to $5.473 billion, a year-over-year increase of 2%, but a decline of 11% compared to the previous quarter; net profit was $123 million, compared to a net loss of $139 million in the same period last year, which is a year-over-year increase of 188%, but a significant decrease of 82% compared to the previous quarter; adjusted net profit, not in accordance with US GAAP, was $1.013 billion, a year-over-year increase of 4%, but a decline of 19% compared to the previous quarter.

In AMD's performance, although revenue was slightly higher than expected, profits were not ideal, and the market was not impressed with AMD's guidance for Q2 2024, fearing that there were no signs of acceleration in the sales of its AI chips, leading to disappointment and a significant drop in stock price in after-hours trading.

STMicroelectronics: Revenue Decline in Automotive and Industrial Sectors, Poor Q1 Performance

STMicroelectronics achieved net revenue of $3.465 billion in Q1, a year-over-year decrease of 18.4%, and a sequential decrease of 19.1%; gross profit was $1.444 billion, a year-over-year decrease of 31.6%, and a sequential decrease of 26%, with a gross margin of 41.7%; net profit was $513 million, a significant year-over-year decrease of 50.9%, and a sequential decrease of 52.4%. The slowdown in demand for chips in the automotive industry led to STMicroelectronics' Q1 revenue falling below analysts' expectations. The company stated that, considering the weak demand in the automotive industry, it has revised its full-year 2024 revenue forecast down from $15.9 billion to $16.9 billion to $14 billion to $15 billion, and it expects the gross margin to remain at the 40% level.

For several months, STMicroelectronics and the entire chip industry have been grappling with the sluggish demand for consumer electronics, due to the slowdown in the smartphone and computer markets. In contrast, the automotive industry has been seeking smaller and more energy-efficient chips, making the automotive semiconductor sector quite stable. However, this trend is currently changing.

STMicroelectronics' President and CEO, Jean-Marc Chery, stated that the first-quarter net profit and gross margin were below the mid-point of the business forecast range, mainly due to the decline in revenue in the automotive and industrial sectors, but the increase in revenue from personal electronics offset this impact. Compared to previous expectations, the demand for automotive semiconductors slowed down in the first quarter, entering a deceleration phase.

Apple: Slight Q1 Decline, but Revenue and Net Profit Exceed Market Expectations

Apple's total net revenue for Q1 was $90.753 billion, a year-over-year decrease of 4%; net profit was $23.636 billion, a year-over-year decrease of 2%. Apple's Q1 revenue from Greater China was $16.372 billion, a year-over-year decrease of 8%.

Apple's Q1 revenue from the iPhone was $45.963 billion, a decrease from $51.334 billion in the same period last year, failing to meet analysts' expectations; revenue from the Mac was $7.451 billion, an increase from $7.168 billion in the same period last year, exceeding analysts' expectations; revenue from the iPad was $5.559 billion, a decrease from $6.67 billion in the same period last year, failing to meet analysts' expectations; revenue from wearables, home devices, and accessories was $7.913 billion, a decrease from $8.757 billion in the same period last year, failing to meet analysts' expectations. Revenue from services was $23.867 billion, an increase from $20.907 billion in the same period last year, exceeding analysts' expectations.Texas Instruments: Q1 Business Performance Across the Board is Subpar, Revenue and Net Profit Decline, Market Full of Challenges

Texas Instruments (TI) reported Q1 revenue of $3.66 billion, a year-over-year decrease of 16.4%. Although this marks the lowest quarterly level since 2020, it was slightly above the market expectation of $3.61 billion. Non-GAAP earnings per share were $1.10, which was expected to be $1.08. Net profit was $1.11 billion, a 35% year-over-year decline, with expectations at $983 million.

As the largest manufacturer of analog semiconductors and embedded processors, Texas Instruments has the broadest customer base among chip makers, with a customer base spanning multiple industries from space hardware to consumer electronics, and is seen as a barometer of economic confidence.

During a conference call, Texas Instruments' management stated that revenue from all markets had declined, with industrial revenue falling by a single-digit percentage and communication equipment revenue dropping by 25%. Texas Instruments' President and CEO, Haviv Ilan, emphasized the challenges the company is facing recently, noting that revenue from all end markets has seen sequential and year-over-year declines. This decline highlights broader market challenges, potentially influenced by economic conditions affecting global semiconductor demand.

Texas Instruments indicated that most customers in its largest segment—industrial equipment manufacturers—have completed inventory reduction. However, some companies are still in the process of doing so. Texas Instruments' CFO, Rafael Lizardi, stated in an interview that this has led to uneven demand recovery.

What are the turning points emerging in the market?

The storage market is accelerating its recovery.

As demand in industries such as mobile phones, PCs, and servers gradually recovers, coupled with the gradual implementation of capacity reduction measures by storage manufacturers, prices for some major categories of storage products have bottomed out and are on the rise.

The price increase wave is accelerating the recovery of performance for upstream storage giants.This trend is also evident in the performance reports from Samsung and SK Hynix. SK Hynix stated that its Q1 results were impressive, primarily due to the sustained strong demand for AI, signaling that the memory market has officially entered a comprehensive recovery phase. Among these, SK Hynix has actively expanded production around HBM, which is needed for AI, and announced the mass production of the next-generation HBM3E high-bandwidth memory chips in March. SK Hynix has signed an agreement with TSMC to collaborate on the production of the next-generation high-bandwidth memory chips, HBM4.

In February of this year, Kim Ki-tae, Vice President of SK Hynix, indicated in a blog post that despite it being only the beginning of 2024, all of SK Hynix's HBM for this year has already been sold out. During the Q1 financial report meeting, SK Hynix mentioned that it is increasing the supply of its cutting-edge HBM3E chips and is in negotiations with some customers for long-term contracts for these semiconductors.

SK Hynix's CFO, Kim Woohyun, said, "With the industry's best technology in the HBM field, we have entered a clear recovery phase. We will continue to commit to providing the best-performing products in the industry at the right time, adhere to profit priority, and improve financial performance."

Samsung also reported that in the first quarter of 2024, the overall market demand for the memory business was strong, with product prices continuing to rise, especially the stable demand for DDR5 and the robust demand for storage related to generative AI. By meeting the demand for high-value-added products such as HBM, DDR5, server SSD, and UFS 4.0, the memory business achieved strong growth and returned to profitability, with an upward trend in the average selling price of storage products. In the server storage market, the stable demand for generative AI has led to strong demand for DDR5 and high-density SSDs. The average capacity of DRAM and NAND for PCs and mobile devices continues to grow, with active shipments to mobile OEM customers in China, and market demand remains strong.

Furthermore, according to the latest forecast data from TrendForce, in Q2, the DRAM contract price is expected to rise by 13-18% quarter-on-quarter; the NAND Flash contract price is also expected to rise by about 15-20% quarter-on-quarter, with only eMMC/UFS prices experiencing a smaller increase of about 10%.

Consumer electronics chips are recovering.

Tech giants such as Intel, Qualcomm, Samsung, AMD, and Apple have undoubtedly felt the chill of sluggish consumer electronics demand in the past period. However, as we enter 2024, the consumer electronics market seems to have welcomed a spring breeze, with products like smartphones and laptops gradually emerging from the trough. According to the latest report released by IDC, in the first quarter of 2024, global smartphone shipments grew by 7.8% year-on-year to 289.4 million units, achieving growth for the third consecutive quarter. The traditional PC market also recovered growth in the first quarter of 2024 after two years of decline. Data shows that global PC shipments in the first quarter of 2024 were 59.8 million units, a year-on-year increase of 1.5%. At the same time, related manufacturers' performance outlook for Q2 has also started to show an optimistic attitude, with many expressing confidence in the market performance in Q2.

Demand for analog and automotive chips still faces challenges.

It is reported that as chip prices slowly warm up, the analog IC industry is also benefiting from the recovery of consumer electronics order demand. At the same time, most customers are looking forward to the peak season effect of consumer products during the 618 shopping festival, so the market is optimistic that the operational performance of analog ICs in the second quarter will show a significant improvement, and some manufacturers have already started re-investing in wafers. Industry insiders point out that this urgent order is mostly a replenishment of channel inventory, similar to the situation with driver ICs, and most customers do not have a clear view of order demand for the second half of the year, and the visibility of orders is still low. However, at least orders have started to flow back.

From the current perspective, the challenges faced by analog manufacturers are still significant, and a comprehensive recovery may have to wait until the third quarter.Texas Instruments and STMicroelectronics' financial reports both contain pessimistic statements regarding the automotive segment. Currently, there is a slowdown in the demand for electric vehicles, with sales not meeting expectations, leading to a situation of inventory backlog in the automotive chip market. Starting from the third and fourth quarters of 2023, several indicative markets have shown signs of oversupply. For instance, Power Management Integrated Circuits (PMICs), which are primarily focused on lower-end manufacturing processes, have become over-supplied as numerous Chinese foundries have entered the market and intensified competition. Additionally, lower-end Microcontroller Units (MCUs) have seen a similar trend. He continued by saying that chip giant TI has also joined the supply race, leading to an increase in overall market supply.

At present, the automotive chip market is undergoing a transition from supply-demand imbalance to equilibrium, which poses a significant challenge for automotive semiconductor suppliers. Although the performance of automotive chip companies in the first quarter of 2024 reflects the short-term challenges faced by the semiconductor industry, it does not change the long-term positive trend of the industry.

However, as for when the automotive market will fully recover, Tao Yang, an analyst from the semiconductor division of Group Intelligence Consulting, stated that according to plans, European and American car manufacturers will begin to adopt electrified architectures and intelligent-related configuration upgrades in a large number of new vehicles around 2026. This will significantly increase the demand for automotive chips. Therefore, it is expected that the structural oversupply situation of global automotive chips may be somewhat alleviated after 2025.