TSMC feels no downturn in the market - November revenue soared 50.2 percent

TSMC management was optimistic this week about its prospects for contract manufacturing of semiconductor components for US customers, as its budget for building two facilities in Arizona reached $40 billion and its design capacity was tripled.
On a global scale the company also feels good because its November revenue grew by 50.2% compared to the previous year.Image source: TSMCIn accordance with the statistics published by TSMC in November the company made about $7.3 billion in current exchange rates, and this corresponds to the sequential growth of 5.9%, and in annual terms the revenue jumped by 50.2%.
We can not hesitate to call this year a period of significant growth for TSMC, because from January to November the company's revenue grew by 44.6% to $67.6 billion.
For not the easiest year in terms of geopolitics the dynamics is very decent.Let us not forget, however, that not everything is cloudy in TSMC activities.
The amount of capital spending for the current year, it still had to reduce from $40 to $36 billion.
At the last quarterly event the company representatives also complained about the decline in demand for products used in the PC and smartphone segments, some of which are produced on an advanced 7-nm process.
By the middle of next year, the company expects to regain the utilization rate of the respective production lines.
The company also has to postpone the modernization of its facilities due to delays in the supply of lithographic equipment.

NVIDIA gaming revenue collapsed by more than half, but server revenue grew by 31%--the company's net income fell by 72%

NVIDIA's long-awaited quarterly report was not a complete disappointment for analysts, as revenue of $5.93 billion slightly exceeded their expectations, and only earnings per share of $0.27 missed forecasts.
On the other hand, NVIDIA expects revenue in the fourth quarter not to exceed $6 billion, while investors were expecting a little more at $6.09 billion.
Only the server and automotive segments maintained positive year-over-year revenue dynamics.Source image: NVIDIAIn this area NVIDIA's revenue in the third quarter rose by 31% compared to the same period last year to $3.833 billion.
In fact, about 65% of all revenue in the last quarter the company received exactly from sales of components for data centers, and the presence of positive Consistent growth was hampered by weak demand in China, but even so, revenue increased by 1%.
As for the impact of U.S.
sanctions on the supply of calculator gas pedals in China, NVIDIA managed to largely offset it by the supply of alternative solutions to the PRC market - we are talking about recently introduced A800.The total revenue of the company at the same time decreased by 17% year-on-year, to $5.931 billion.
Consistent decline reached 12 %.
In the gaming segment, the company generated only $1.574 billion in revenue, down 51% from the same quarter last year, and down 23% from the second fiscal quarter.
By the way, the fourth quarter of fiscal 2023 is already on the NVIDIA calendar, so the captions in the table may be confusing to the uninformed reader.Image source: NVIDIAAccording to NVIDIA representatives, the dynamics of gaming revenue in the third quarter reflected the decline in supply of GPUs to its partners, who had to find ways to reduce accumulated inventory as quickly as possible.
Demand for graphics cards was undermined by both macroeconomic problems and the impact of lockdowns in China.
While a 51 percent year-over-year decline in gaming revenue was blamed on declines in both desktop and mobile graphics chip sales, the 23 percent sequential decline was primarily driven by mobile graphics solutions.There were few comments from the CFO about the impact of the cryptocurrency sector on NVIDIA's business.
According to Colette Kress, the transition of Ethereum to a new mathematical model reduced the degree of suitability of video cards for cryptocurrency mining.
In turn, this contributed to the influx of used graphics cards in the secondary market and reduced the demand for new graphics cards in some regions of the world, especially in its budget part, according to NVIDIA.In the direction of professional visualization NVIDIA's revenue decreased by 60% to $ 200 million, in annual comparison, the decline reached 65%.
In contrast, the automotive segment increased 86 percent to $251 million in year-over-year revenue and 14 percent in sequential revenue - primarily due to demand for autopilot systems.
For OEM and other, NVIDIA revenue decreased 69% year-over-year to $73 million and sequential revenue decreased 48%.
Sequential decrease in NVIDIA explain the decline in demand for Jetson platforms and components for notebooks, and revenue from sales of CMP gas pedals for cryptocurrency mining in the past quarter was negligible, although a year ago, reached $ 105 million.
Operating expenses of NVIDIA in the third quarter rose by 7% sequentially to $ 2.576 billion and by 31% year on year.
Operating income increased 20% sequentially to $601 million, but was down 77% year over year.
Net income rose 4 percent sequentially to $680 million, but was down 72 percent year over year.
NVIDIA's revenue per share also fell proportionally, from $0.97 last year to $0.27 this year.
It is noteworthy that NVIDIA's overall revenue in the segment of computing and network solutions grew by 27% year over year to $3.816 billion, although as you can guess in this case, the company helped the server segment.
Graphics sales alone were 24 percent less than the previous quarter, and 48 percent less than the year before - only $2.115 billion.
As a side note, NVIDIA was forced to write off $702 million in the third quarter due to a backlog in its inventory, but it was mainly due to problems with its server component A100 sales in China.
The breakdown was as follows: $354 million was for products that were already in stock, while $34 million was for products that were out of stock.

AMD's number of customer processors shipped in the third quarter fell 43%

At the quarterly reporting event, company executives talked about changes in the processor supply mix only in relative terms, but the 10-Q reporting form released later allowed for specific numerical figures.
AMD said the number of CPUs shipped in the quarter was down 43 percent, though the year-over-year average selling price was up 5 percent.Source image: AMDRemind that AMD's third-quarter revenue in the customer segment fell 40 percent from $1.7 billion to $1.0 billion, due to significant inventory build-up in customers' warehouses while demand decreased.
While AMD has seen a 43 percent year on year decline in volume terms for the segment, the average selling price has even increased 5 percent although yesterday AMD officials said the number was down in sequential terms.AMD attributes the decline in processor shipments in volume terms to an accumulation of substantial inventory in the customer warehouse and a decline in demand for the product, but the year on year increase in average selling price is due to an increase in the share of more than 10 percent of the total sales volume.
In this comparison, the number of CPUs sold to customers has decreased by 18%, and their average price has increased by 28%, but in this case due to the shift in demand towards more expensive mobile Ryzen models.
Apparently, by the third quarter, the moment of inertia in sales of mobile processors AMD exhausted itself, and only desktop versions of Ryzen among the more expensive ones were in sane demand.
By the way, AMD explained how its revenue changed in the gaming segment, which includes not only discrete graphics cards, but also components of game consoles.
On an annualized basis in the third quarter, it grew 14% from $1.4 billion to $1.6 billion, but since the beginning of the year growth reached 34% and corresponded to the level of revenue of $5.2 billion.
The engine of growth were gaming consoles, as noted yesterday, but gaming graphics cards have not only declined in revenue, but also reduced the number of shipped units.
The weakness in video card demand is attributed to worsening macroeconomic conditions.

AMD prepares for further revenue decline - PC market situation will improve only in 2023

AMD quarterly conference revealed that the company's revenue in the consumer segment on the background of declining demand for new PCs decreased by 40% compared to the same period last year.
At the same time, the trends in which the market is developing at the moment are not so unambiguous as to characterize them by any single definition.
It is only clear that now the market is falling, but recovery is not far off, believe AMD.Source image: AMDFirst, AMD CEO Lisa Su (Lisa Su) explained that revenue in the client area in the third quarter decreased, among other reasons, due to lower number of processors sold.
Their average selling price also declined in a sequential comparison, as more expensive processors were depleted faster in terms of inventory.
In year-on-year comparisons, the average selling price went up, and this can be explained by the continuing tendency to shift the focus towards more expensive models.
The head of AMD even added that the company's position is strong in the premium, gaming and corporate customer market segments, and it expects to strengthen its position in these areas going forward.
In the long term, the price structure of AMD products supply in the client segment should not change, as the head of the company is convinced.As noted earlier today, AMD management expects to reduce the number of computers sold in the whole market by 20% this year, and next year's decline will be limited to 10%.
The company will continue to actively get rid of inventory in the fourth quarter, and this process is somewhat accelerated in a sequential comparison, and in general by the end of the year AMD will be in better shape, but it should be understood that the revenue in the current quarter slightly reduced in the client segment, as well as in the gaming.
In the latter case, such dynamics can be explained by the fact that the peak demand for components for gaming consoles occurred in the third quarter, and in the fourth quarter it traditionally declines.
New gaming video cards with RDNA 3 architecture, which will be presented this week, though will be able to revive the market in the fourth quarter, losses from the decline in demand for game consoles components will not be able to cover.
But next year AMD expects to maintain revenue in the gaming segment at the level of the current year, which, given the high base effect formed by the last stages of the cryptocurrency boom is quite optimistic.In general, speaking of the PC market, AMD management expects to overcome major problems in the current quarter and early next year, and the rest of 2023 should already contribute to the PC market recovery, according to Lisa Su.
In the customer segment, she promises to introduce some new products (most likely the new Ryzen 7000), which, combined with the recently announced Ryzen 7000 processors, will help revive interest in the brand's products.Moreover, at retail, even in the third quarter, sales volumes of Ryzen 5000 processors grew, according to Lisa Su, but only when it comes to desktop models.
With the expansion of the range of motherboards with socket AM5 more affordable models in the current quarter will increase the popularity of the new family of Ryzen 7000 processors, as the company's management expects.
AMD is not ready for the aggressive pricing policy for the sake of reducing the inventory, because it is important for it to maintain the profitability indicators.
Last year, for example, the company did not fight for the segment of Chromebooks, because it was based on too cheap processors, the release of which was unprofitable for the company.

Ryzen processor sales collapsed by 40% - AMD has negative profits in the customer segment

AMD quarterly report was released a few hours ago, and in terms of revenue dynamics only slightly disappointed analysts, who were ready for the loss of the former momentum of the PC market.
The company's total revenue was up 29% year-over-year, but in the consumer segment it collapsed by 40% due to Ryzen processors, and had to end the quarter with operating losses in this area.Image source: AMDNet revenue for AMD fell 93% to $66 million, but the company attributes this to the costs associated with the Xilinx takeover deal.
At the end of the quarter AMD's revenue was $5.6 billion, and while a 29% increase in annualized terms cannot be characteristic of previous quarters, it still looks decent against the backdrop of competitors.
Profit margin decreased during the year from 48% to 42%, operating expenses increased by 113% to $2.43 billion, and the quarter ended with an operating loss of $64 million.
The company explains this by the growth of expenses on research and development, as well as by the consequences of the Xilinx takeover deal.
Due to the need to reduce inventories and review product prices in the past quarter AMD lost at least $ 160 million.Image source: AMDAs the head of the company Lisa Su (Lisa Su) said at the conference call, \"the third quarter was worse than we expected because of the deteriorating PC market and a significant correction of inventories in the supply chain in this segment.
In fact, the value of inventory at the end of the quarter increased 77% to $3.37 billion.
Even in such a difficult environment, the CEO added, the company managed to increase revenue in the data center, embedded and gaming solutions segments.
At least in the area of game consoles there was a positive trend.Image source: AMDIn the segment of data centers revenue grew by 45% year on year to $1.6 billion due to the popularity of central processors EPYC family.
Operating profit rose from $308 million to $505 million, and the operating margin rose from 28% to 31%.
The past quarter was AMD's tenth consecutive quarter in which its server processor sales volumes in cash terms broke a record.
EPYC processors of new Genoa generation are in high demand, as pointed out by AMD, although their formal announcement is only scheduled for November 10.
Shipments of Xilinx Programmable Matrixes and Pensando Computing Accelerators are up noticeably.
Lisa Su said she expects revenue growth in the server segment next year, especially cloud solutions in the U.S., but the Chinese market will be weak.Image source: AMDIn the client segment, AMD saw a 40% drop in revenue to $1 billion compared to the same quarter last year.
Processor shipments declined due to inventory surpluses while demand in the PC market declined, all of which resulted in an operating loss of $26 million in the segment.
Nevertheless, the shift in the supply mix in favor of the more expensive Ryzen desktop models allowed the average selling price to increase year-over-year.
The company only needs to add that the Ryzen 7000 processors with Zen 4 architecture introduced in the last quarter received praise in published reviews.
By the end of 2023, according to Lisa Suh, the capacity of the PC market should shrink by 10%.
This year, the market will shrink by the full 20%.Image source: AMDIn the gaming segment, which recently includes both graphics cards and components for gaming consoles, AMD managed to increase revenues by 14% year-on-year to $1.6 billion.While revenues in the direction of graphics cards declined, gaming consoles provided a positive trend, partially compensating for this.
In fact, gaming console components have been breaking revenue records for six consecutive quarters.
Operating profit in this segment fell from $231 million to $142 million.
The company had to generate less revenue from graphics solutions and faced increased inventory, as well as downward price adjustments.
The operating profit margin dropped from 16% to 9%.
Gaming consoles were in high demand because of Microsoft and Sony's preparations for the new season.
On the profile slide of the presentation AMD also did not forget to mention the preparation for the announcement of graphics solutions generation RDNA 3 with chips produced by 5nm technology.
Novelties are to significantly increase performance compared to current generation products.
As expected, they will be presented this week.AMD's revenue in the segment of embedded solutions grew by an impressive 1549% to $ 1.3 billion as a result of changes in the accounting structure and the acquisition of Xilinx at the beginning of the current

Intel has returned to profitability despite falling revenue

Intel Corp.'s third-quarter revenue fell 15% to $15.3 billion, in full compliance with its management's projections.
By the middle of the decade, Intel hopes to cut annual expenses by $8-10 billion, with savings reaching $3 billion as early as next year.According to the head of the company, staff cuts will not be a significant factor in savings, although they will start already in the current quarter.Image source: Intel Net income at Intel in the past quarter fell by 59% from $5.9 to $2.4 billion using Non-GAAP method and operating profit margin fell from 31.8 to 10.8 %.
Profit margin fell from 58.3% to 45.9% year over year.
At the same time, the company managed to increase spending on research and development by 12% to $5.4 billion.
Intel was forced to end the quarter with operating losses, but due to the tax refunds it showed a net profit.
The period ended with an operating loss of $175 million, but a net profit of $1.02 billion.In the client computing area, which is most dependent on PC market conditions, Intel's revenues fell 17% year over year to $8.1 billion, but grew sequentially by 6% due to an increase in average selling price.
Intel expects PC sales to dip 15 to 19 percent this year, primarily in the consumer and education sectors, as well as inventory adjustments in the OEM segment, but year-over-year sales should remain above pre-pandemic levels for the foreseeable future.
At the end of next year, PC sales should either remain at current levels or decline slightly.
According to the Intel representatives, from 270 to 295 million computers will be sold next year.
The head of the corporation even said that Intel was able to significantly strengthen its position in the PC segment in the third quarter.Image source: IntelIn the server segment last quarter, revenue at Intel dropped by an impressive 27% to $4.2 billion, but in the reporting documents the company proudly announced that it had started production of those models of processors Sapphire Rapids family, which were aimed at mass consumption, and also expects to slightly increase its market share in this segment by the end of the year.
In the past quarter, Intel's server revenue was undermined by weak demand in the Chinese corporate sector.Image source: IntelThe immediate issue of the upcoming staff reductions at the quarterly event Intel management spoke reluctantly, only noting its inevitability.
Intel's freelancers and contractors will be the first to suffer, they will feel Intel's desire to save money as early as this quarter.
Marketing and advertising costs will be cut.
Quantitative figures for staff reductions are not specified, but CFO Davis Zinsner let it slip that they will be significant.
CEO Patrick Gelsinger added that production costs would be prioritized over payroll in the search for cost savings.
By early October, the company had 131,500 employees.According to Intel's management, the company is on track to implement a plan to master five new process technologies in four years.
There were no delays in learning Intel 4 and Intel 3 technologies, the first prototypes of chips made with the Intel 20A and Intel 18A technologies were already running in the company's labs, and this also applies to products for a large third-party customer - at least the digital design of the respective product is ready and the first working samples exist.
In the customer segment, the company is going to introduce Meteor Lake processors (Intel 4) next year, at the same time Emerald Rapids servers will appear.
On schedule, the company is preparing to launch server processors in 2024.
The Meteor Lake series stepping design should be completed this quarter, and Intel's server segment managed to get the first Intel 3 Granite Rapids processor components last quarter, systems based on their samples are already working in Intel labs.
For the first time, the company will use ultra-hard ultraviolet (EUV) lithography as part of its Intel 4 and Intel 3 processors.
This will endow the respective products with breakthrough performance in terms of performance per watt of power consumption and density, according to Intel.Image source: IntelSome of Intel's business areas showed positive revenue growth in the third quarter.
Among them were networking and edge computing solutions, which grew revenue 14% to $2.3 billion and kept operating income at $75 million, despite an 85% decline from the same period last year.

Intel will lay off thousands of employees because of the downturn in the PC market

Intel is due to report its third-quarter financial results later this month, and the event will be preceded by a painful decision for the company to cut staff, according to knowledgeable sources.
The number could run into thousands of layoffs, with some divisions losing up to 20 percent of their jobs.Source image: IntelInformation about the impending downsizing at Intel was released this week by Bloomberg, but concerns about its inevitability have previously been expressed by anonymous company employees on social media pages.
As of the end of July, Intel had 113,700 employees, as many semiconductor companies had stopped hiring this summer, and at the previous quarterly conference, the CFO said Intel would be forced to cut costs in the third quarter of this year.By some estimates, Intel units will lose one in five employees in some cases, but that is more true for professionals in sales and marketing.
Analysts at Gartner and IDC reported this week that PC and laptop sales were down 15% or 20% in the third quarter compared to the same period last year.
Intel still depends about half of its revenue on the PC segment, so current market trends are undermining the company's financial performance.
According to Intel's own forecasts, its year-end revenue could decline by $11 billion from expectations.
Third-party analysts believe Intel's third-quarter revenue will fall about 15%.
Intel's profit margin is also approaching 45% versus its historical 60%.
In such circumstances, it is necessary to take measures to reduce costs, and laying off some staff is the traditional way to achieve it.Intel's fixed costs could reach $25 or $30 billion, according to some experts, and staff cuts would reduce that amount by an amount of 10 to 15%.
Intel's previous major downsizing took place in 2016, when about 11 percent or 12,000 employees lost their jobs.
Intel's stock price has fallen more than 50 percent this year, and it lost 20 percent in the last month alone.
Management needs to show resolve in the fight to cut costs in order to gain investor confidence.
Dividend payments are also in question, but the public offering of its Mobileye subsidiary should provide Intel with an influx of capital, which is good news amid such a gloomy trend.

AMD Ryzen sales plummeted by 40% last quarter - company underperformed by $1 billion, shares fell

The third fiscal quarter is barely over on the calendar of many companies, but that doesn't stop them from summing up the preliminary results of this reporting period.
AMD did not wait for full statistics to be published, and this week was forced to admit that revenue fell short of its own expectations by an average of $1 billion, and in the client area, mainly represented by Ryzen processors, and even fell by 40% year on year.Image source: AMD Management said that in the third quarter the company generated no more than $5.6 billion, while its own forecast earlier mentioned a range of $6.5 to $6.9 billion.
Profit margin instead of the expected 54% was barely close to 50%.
Such statements caused the decline in the company's share price after the end of the trading session by 4.5%.Speaking about the results of the quarter in more detail, CEO Lisa Su (Lisa Su) said that \"the PC market in the past quarter significantly sagged.
Even AMD's competitive range of desktop and mobile processors could not overcome the negative macroeconomic trend and customers maintaining substantial inventory of products yet to be sold.Specifically on the customer side, AMD reduced revenue by 53% sequentially and 40% year over year, to $1 billion.In the data center segment (server processors and gas pedals) revenue increased by 8% sequentially and 45% year over year, to $1.8 billion.
The Gaming segment (graphics and console chips) was another \"ray of light in a dark realm,\" with core revenues flat quarter over quarter, up 14 percent year over year to $1.6 billion.
Finally, the Embedded Solutions business increased revenues by 4 percent sequentially to $1.3 billion, primarily as a result of the Xilinx acquisition completed this year.
AMD incidentally had to write down $160 million due to product price adjustments and unrealized product inventory.
It is noteworthy that operating expenses in the third quarter even decreased from $1.6 to $1.5 billion against expectations.By the way, overall AMD revenue decreased by 15% only in sequential comparison, in annual terms it increased by a solid 29%, although against the background of the achievements of previous quarters such dynamics and does not seem expressive.

Intel and AMD are poised for a worse PC market this year than predicted

Intel and AMD executives recently not only spoke at industry analyst conferences but also met with them privately.
Bernstein experts, for example, spoke with both Intel CFO David Zinsner and AMD server division head Dan McNamara.
Both believe that the third quarter was worse than expected, and therefore the results of the whole year may adjust accordingly.Image source: AMDAt least, this forecast is true for the PC market.
According to Zinsner, the situation in this market has deteriorated more than the 10 percent reduction laid down in the July forecast relative to the results of 2021.
Intel's CFO is not yet ready to give specific figures for the decline, but added that the situation in the server segment has also deteriorated due to weaker demand in China and the difficult macroeconomic environment.AMD representative in his comments to analysts Bernstein made it clear that the PC market is now in turmoil, and customers are showing demand below expectations.
Earlier the company had expected the PC market turnover to shrink by 15% for the year, but now there is every chance that the reality will be worse than expected.
In spring both companies were counting on the improvement of the PC market in the second half of the year, but now they timidly pin such hopes on the fourth quarter, and only in some areas of activity.
AMD, for example, is convinced that the release of new gaming video cards of this brand will contribute to the growth of demand for profile products in the fourth quarter.

NVIDIA reported collapsed sales of graphics cards in the second quarter and expects further decline in the third quarter

NVIDIA management managed to warn investors about the sharp decline in revenue in the gaming segment for the second quarter in advance, so the publication of quarterly reports this week did not end with special shocks.
At least, a 4.5% drop in the company's shares after the close of trading could hardly be called a catastrophe.
Recall, the company's revenue in the gaming segment decreased by 44% sequentially to $2.042 billion, on a year-over-year basis it decreased by 33%.Source image: NVIDIAIn NVIDIA's quarterly reports there is another segmentation: revenue from graphics solutions decreased by 39% sequentially to $2.8 billion, on a year-over-year basis it decreased by 28%.
The company's total revenue, while falling 19 percent sequentially to $6.704 billion, increased 3 percent year over year, and that was due to the data center and telecommunications segment, which accounted for $3.907 billion of that total.
Deliveries of telecommunications solutions and computing gas pedals, as well as other server components, helped to increase profile revenue by one and a half times compared to the previous year.
Strictly in the data center business, revenue was up 61 percent to $3.806 billion.
Colette Kress, chief financial officer at NVIDIA, stressed that in the server business, revenue was below expectations because of the continued shortage of components.On the reasons for the sharp decline in gaming revenue NVIDIA management preferred to speak evasively in prepared statements, preferring to blame the deteriorating macroeconomic situation for the drop in demand for graphics cards.
At the same time, there was no denying that measures were taken to help reduce the price of graphics cards and increase their sales.
In the third quarter, according to the CFO, difficult market conditions will persist.
A whole paragraph in the material with Colette Kress' comments was devoted to the volatility of the cryptocurrency market, its ability to affect the gaming revenue of NVIDIA and the inability of the company itself to accurately assess the extent of this impact.
It was just noted that the supply of cryptocurrency mining gas pedals to professional market participants for the second quarter in a row almost wiped out, although a year ago it provided the company with $266 million in revenue.Image source: NVIDIAThe transcript of Colette Kress' speech at the quarterly event allows to reveal a little more about the reasons for the decline in gaming revenue in the second quarter.
The decline in demand for gaming solutions in Europe, according to NVIDIA executives, was caused by the Ukrainian events, and in China it was triggered by lockdowns.
Demand for NVIDIA gaming solutions fell harder than expected, with both shipments in quantitative terms and the average selling price affected.
The company is working with partners to adjust retail prices in order to review the positioning of senior models of graphics processors in preparation for the release of carriers of the new architecture.
In the long term, as the company's CFO explained, NVIDIA expects stable demand in the gaming segment.
Colette Kress even said in one comment that \"new gaming products are on the horizon.\" The 61% revenue growth in the data center segment was mainly attributed to an increase in equipment shipments to large customers in North America, while the Chinese segment, due to the difficult economic conditions in the region, created the grounds for negative revenue dynamics.Visualization Solutions business brought NVIDIA 4% less revenue than a year ago, and the sequential decline has reached The company's total revenue in the current period will not exceed $5.9 billion compared to $6.7 billion in the previous period.
This is almost a billion dollars lower than analysts expected, which is why the NVIDIA stock price and rushed down after the publication of statements, which in part of the second quarter was already predetermined.
Gaming and professional imaging solutions will cut into the company's core revenues in the third quarter, management expects.Colette Kress's comment piece explains that NVIDIA's profit margin declined from 66.7% to 45.9% in the second quarter due to one-time expenses of $1.22 billion, mostly related to inventory for the server and gaming market segments.
Of that amount, approximately $570 million was written off due to higher inventory levels and $650 million relates to a liability for purchasing products beyond the quantities required under long-term contracts.

The global semiconductor industry's capital spending for 2021 and 2022 will exceed $338 billion

As demand for electronics declines in the consumer sector, it is more common to hear of intentions to cut capital spending from memory manufacturers, which is only natural.
Experts note that even caution, which is currently displayed by some market players will not prevent the semiconductor industry from ending the year with a record $185.5 billion in capex.Source image: IntelAccording to IC Insights, analysts expect the growth of CapEx in the industry to reach 21% by the end of 2022.
This is less than last year's growth of 35%, and less than the forecasted value at the beginning of this year (24%), but the nuance is that for the third consecutive year, the capital expenditure of the semiconductor industry is growing consistently by double-digit percent.
This was last seen from 1993 to 1995 inclusive.Image source: IC InsightsIc Insights analysts previously expected semiconductor capital spending to increase to $190.4 billion this year, but difficult macroeconomic conditions and signs of an overproduction crisis in some market segments suggest that growth will be limited to 21 percent and that spending will not exceed $185.5 billion.
In any case, together with the last year market participants will spend an impressive $338.6 billion for the construction of new enterprises.
At the same time, conveyors of vertically integrated producers of chips are still loaded more than 90%, and contract manufacturers load their capacities at 100%, still not being able to meet the entire demand.
Most likely, as the authors of the forecast summarize, next year the industry will face a decrease in the amount of capital expenditures, as market participants will need to assess the situation after three years of active growth.

NVIDIA's third quarter revenue will not exceed $6.5 billion, analysts say

NVIDIA management chose to begin last week by saying the actual second quarter revenue numbers did not match market expectations, with the company refusing to comment publicly on related topics until the full report was published on August 24.
Outside analysts expect that the third quarter in the reporting NVIDIA will not please investors, previously expected the company to receive $7.4 billion in revenue.Source image: NVIDIAAccording to experts at Bank of America, in the third fiscal quarter NVIDIA will get from $6 to $6.5 billion, and scheduled for this period, the announcement of new gaming solutions generation Ada Lovelace not particularly correct the situation.
As you know, in the second quarter, NVIDIA's gaming revenue declined 44% sequentially to $2.04 billion, and triggered by a combination of factors, the crisis of overproduction in the consumer segment, according to the authors of the brief, though deep, but will pass quickly enough.It will clear the stock for the next generation of NVIDIA 5-nm GPUs - both in the gaming and server segments.
In the third quarter, the company in the server segment will probably earn the same amount as in the second - about $3.81 billion, or slightly less, as the dynamics of sales continue to be negatively affected by a shortage of components.
In the future, the demand for server novelties will begin to stimulate the growth of NVIDIA's revenue in this segment.
First, Hopper generation compute gas pedals and Grace CPUs will hit the market.
Secondly, they will be combined with Intel Sapphire Rapids and AMD Genoa CPUs.
Representatives of Bank of America recommend NVIDIA shares for purchase and forecast their price value to rise to $220.
Yesterday's trading session ended at $181.60.

Back in the 90s: Desktop CPU sales have slipped to the level of 30 years ago

Mercury Research experts this week updated CPU shipments for the second quarter, and it was disappointing for the desktop segment: year-on-year shipment volumes fell by 15 percent, to their lowest level since the mid-1990s.
Source image: AMDAccording to the representatives of the analytical agency, it is the minimum number of delivered desktop processors for any of the quarters from the middle of the last decade of the last century to the present.
In the first quarter, desktop processor shipments declined consistently by a record 30 percent, so the situation the industry is now seeing has been incremental.For more than a decade, according to Mercury Research, laptops have been actively displacing desktop systems.
By the end of last year, PC manufacturers had accumulated a surplus of desktop processors, and these two factors combined to provide a sharp decline in new processor shipments in this segment.However, mobile processors were also shipped 30% less in the second quarter than a year ago.
Shipments of all x86-compatible processors combined in the second quarter declined year-over-year by a record 19% in the 28-year history of surveillance.
Having no data for the period before 1994, Mercury Research experts make the assumption that the PC processor market in the last quarter faced the largest decrease in sales volumes since 1984.
By the way, it did not prevent AMD from increasing its market share of all x86-compatible processors to 31,4% by the end of the second quarter, which is a historical record for this vendor.

NVIDIA's gaming graphics card sales plummeted 44% in the quarter: Company blames \"macroeconomic situation\"

To brighten a languid Monday evening with unexpected revelations about fiscal Q2 results, NVIDIA decided to admit that total revenue for the period is unlikely to exceed $6.7 billion from the previously forecasted $8.1 billion, and that gaming revenue will be limited to $2.04 billion at all, down 44% sequentially and 33% year over year.
Source image: Getty ImagesFor NVIDIA the publication of preliminary results for the quarter is an event out of the ordinary, and the reason for such extraordinary measures was the lowering of the forecast for gaming revenue in the fiscal quarter, which ended July 31.
In the text of the official press release management of the company preferred to write off all the failures to the \"macroeconomic difficulties\", which prevented NVIDIA partners from selling video cards in stock.
Since the unfavorable macroeconomic conditions are expected to continue in the current quarter, the company decided to make adjustments to the pricing policy, encouraging early sales of stocked gaming graphics cards.
In total, as summarized in an official report, at the end of the second quarter had to write off up to $1.32 billion due to the current situation in the gaming market.Such failures, according to the head and founder of NVIDIA Jensen Huang (Jensen Huang), do not cancel the willingness of the company to serve the growing promising market segments like artificial intelligence systems.
NVIDIA CFO Colette Kress (Colette Kress) added that the significant write-downs in the second quarter were due to large advance payments to the company's suppliers, which were made at a time of severe semiconductor component shortages.
In the near future, NVIDIA will have to focus on maintaining the profitability of the business by limiting the growth of operating costs.
At the same time Colette Kress promised not to refuse to buy back the company's shares, expecting to maintain NVIDIA stable sources of cash.Image source: NVIDIAThe column names in the table above should not be confusing - in the NVIDIA financial calendar at the end of July ended the second quarter of fiscal year 2023.
Previously, NVIDIA had expected to maintain a profit margin in the range of 65.1 to 67.1 percent, depending on the method of calculation, but the actual value of this indicator in the second quarter should approach 43.7 or 46.1 percent, depending on the method.Source image: NVIDIAThe other segments of NVIDIA partially offset the discouraging dynamics in the gaming area, but we must understand that the latter in the second quarter provided the company almost a third of all revenue.
The server segment was the main driver of total revenue, generating $3.81 billion for the quarter, up 1% sequentially and 61% year-over-year.
The professional imaging solutions business declined to $0.5 billion in revenue, down 20% sequentially and 4% year-over-year.
The automotive segment saw revenue rise to $0.22 billion (up 59% sequentially and 45% year over year), but in absolute terms it is still too small an amount to make a serious difference.
Finally, the OEM line of business generated only $0.13 billion in revenue, down 12% sequentially and 66% year-over-year.
In the same period last year, this revenue item was influenced by shipments of specialized CMP gas pedals for cryptocurrency mining, but in the first quarter of this year they almost went to zero.Overall, NVIDIA revenue for the second quarter should decline by 19% to $6.7 billion sequentially, but grow by 3% year-over-year.
The latter element of the dynamics is a credit to the company's predominantly server business.
NVIDIA promises to publish a full quarterly report on August 24, at which time it will be possible to talk in more detail about the factors contributing to such dynamics of changes in the financial performance of the company.
NVIDIA shares opened today's trading session with 8% decrease, but at the moment of writing the difference with the closing rate of the previous session decreased to 4.5%.

Decline in mining will force NVIDIA to say goodbye to super profits for years to come

AMD and Intel will report second quarter financial results later this month and NVIDIA will do so only in August, but industry analysts are already forming their predictions about the impact of recent events on these companies.
According to Citi, the decline in demand for gaming graphics cards due to the cryptocurrency market will affect NVIDIA's revenue up to and including 2024.Source image: NVIDIAThe authors of the briefing note explain that two factors will play against NVIDIA: the decline in demand for PCs in general, and increased stocks of graphics cards in retail chains.
According to representatives of Citi, the decline in revenue from gaming products in the next two years will have a negative impact on total revenues, which this year will decrease by 9% of the previously projected level.
Next year, Citi analysts cut NVIDIA's revenue by 7% in their forecasts, and extended the effect of the current phenomena to 2024, reducing the projected revenue for that period NVIDIA by 5%.
The forecast for the price of its shares was lowered from $315 to $285, but it is argued that the weakness of the gaming segment is already built into current quotes - now the price of NVIDIA shares slightly above $150.Experts KeyBanc outlined the prospects of NVIDIA gaming revenue decline more specifically, stating the possibility of its reduction by 20% by the third quarter of 2022 compared to the second quarter.
The second half of the year as a whole, according to the authors of the analytical note, will be difficult for NVIDIA, Intel, AMD and Qualcomm.
Experts believe that NVIDIA shares will rise in price only up to $230, and in the near future the company's revenue will be negatively affected by inflation, the recession in the cryptocurrency market and the approaching announcement of GeForce RTX 40-series graphics cards.AMD will not remain aloof from such phenomena, according to representatives of KeyBanc.
The company's shares will rise to $130 from the current $76.36, and AMD's revenue growth will be limited not only by the decline in demand for PCs, but also by surplus gaming-class GPUs, which will inevitably form after the loss of interest from miners to buy new graphics cards.J.P.
Morgan experts see in the upcoming market trends and factors favorable to NVIDIA.
In particular, demand for server components from cloud service providers, in their opinion, will remain at a high level not only until the end of this year, but next year as well.
Accordingly, this will benefit not only NVIDIA, but also competitors AMD and Intel, as well as Micron and Western Digital Corporation.

Capital spending in the semiconductor industry could be cut by 16% next year

A report from Micron Technology has let industry analysts know that the company is ready to cut the amount of capital spending in the next fiscal year, which in the memory manufacturer's calendar will start in the first half of September.
The exact amount of the reduction has not yet been named, as there are about two months left until the end of the fiscal year, but experts believe that Micron's example is ready to be followed by other semiconductor manufacturers.Image source: TSMSCA Analysts Citi, for example, expect the main market players to reduce the amount of spending on building new plants and production lines next year.
If this year, according to their estimates, for the corresponding needs will be spent $95 billion, next year this amount can be reduced by 16% to $80 billion.
On such measures can go not only memory manufacturers, but also contract manufacturers of chips, including the largest.Recall that only TSMC is ready to spend this year from $40 to $44 billion for construction of new plants and development of advanced lithography.
Next year, according to preliminary estimates, the company's capital spending will exceed $40 billion, although so far its representatives are not ready to make clarifications on this parameter.
The value of TSMC's core costs is proportional to its share of revenues in the global market of contract services.
The rapid growth of costs, according to the Taiwanese media, will force the company to raise prices for its services by 6% by the beginning of next year.
This unpopular step is pushed not only by capital costs, but also by an increase in electricity tariffs, which took place at the beginning of this month.

AMD's consumer CPU and GPU sales will drop 6-7% in 2023, but consoles and EPYC will make up for it

Few industry analysts are under illusions about PC market dynamics in the coming months.
Gartner predicts a 9.5% year-over-year decline in PC sales, a view shared by Micron Technology, so it's not surprising to see moderately pessimistic estimates about AMD's business in the customer segment.
Profile revenue of the company next year could decline by $675 million, according to experts Northland Capital Markets.Image source: AMDExcerpts from the analytical note published by the resource Seeking Alpha.
According to the authors of the forecast, AMD next year will reduce the sales of central processors in the client segment by 6%, and graphics - by 7% in value terms.
On the one hand, the consumer demand will be affected by macroeconomic factors and the saturation effect after two pandemic years of rapid growth.
On the other hand, the video card market could be impacted by lower demand from miners.
In the aggregate, AMD revenue in the client segment next year could decline by $675 million.For the company's income as a whole, it will not be a serious loss, because revenue from sales of components for Microsoft and Sony gaming consoles should increase by $400 million from the previous forecast of $740 million.
Thus, the supply of these components will bring AMD at least $1.14 billion next year.
By the way, the company's management has already noted that next year should be a peak year for the current generation of gaming consoles.
Both forecasts are in line with industry trends, as the Xbox Series X/S and PlayStation 5 game consoles will enter the third year of their life cycle.The merger with Xilinx, which has already taken place, will have a negative impact on AMD's business next year, as that brand's FPGAs will reduce profile revenue by 6%.
At the same time, the expansion of EPYC processors in the server segment will be so successful that the growth of revenue by 55% to an impressive $3.1 billion will cover all possible failures in other areas of business.

If U.S.government fails to provide subsidies, Intel will spend more on building facilities in Europe

Intel CEO Patrick Gelsinger's activism last month was aimed at encouraging U.S.
lawmakers to pass a $52 billion package that would subsidize the national semiconductor industry.
The company even said that it might focus on investments in Europe if it does not get support.
It will spend 12 billion euros to expand facilities in Ireland, and a chip packaging and testing facility is set to appear in Italy, with 4.5 billion euros earmarked for the project.
Research centers will appear and expand in France and Poland.
However, in the case of European investments, Intel expects significant material support from the local authorities.Last Wednesday, as noted by CNBC, Patrick Gelsinger allowed himself to say that if U.S.
lawmakers do not form the conditions for granting subsidies to the U.S.
semiconductor industry, the company will have to focus more efforts in Europe.
From the very beginning, as the head of Intel stressed, the company was counting on the support of the authorities in the construction of a new complex in the state of Ohio.
It will either take a long time to build and reach a modest scale if the company has to finance it at its own expense, or reach a significant scale in a more modest time if the authorities provide subsidies.
In the first case, the budget could be as low as $20 billion, while in the second it could be as high as $80 billion.According to Gelsinger, Intel canceled a groundbreaking ceremony for a manufacturing complex in Ohio scheduled for this summer because it wants to make sure it gets state subsidies first.
Ohio Governor Mike DeWine has suggested that Gelsinger is using the delay in building the facilities in the U.S.
to pressure lawmakers.
On the other hand, the governor's own sources in both houses of the U.S.
legislature make it clear that a $52 billion subsidy package will be passed soon.
State officials are prepared to give Intel about $2 billion in incentives to build the manufacturing complex, of which $700 million will be used to build the engineering infrastructure.
Intel representatives explained that Ohio attracted them not only by availability of developed base for qualified personnel training, but also by access to sufficient water resources.

Since the beginning of last year, miners have spent about $3 billion buying video cards

During the previous surge in interest in gaming video cards by miners, NVIDIA had difficulty accurately estimating demand, but concluded that the market downturn had robbed it of about a billion dollars in revenue.
Now outside experts say that since the beginning of 2021, miners have spent on the purchase of video game cards at least $ 3 billion.Source image: NVIDIASorresponding estimates are shared by experts New Street Research from the pages of Bloomberg, mentioning in passing the decline in prices for video cards in the secondary market by up to 50% compared to previous months.
Until recently, according to the authors of the research note, the prices of graphics cards with NVIDIA chips exceeded the manufacturer's recommendation twice, even if the base amount was taken as $ 1499.
Now the market is flooded with video cards previously bought by miners, and it not only reduces the prices in the secondary segment, but also undermines the revenue of NVIDIA and its partners in the primary.To such actions, participants in the process of mining popular cryptocurrencies pushed by both reducing their value, and the impending reform of the Ethereum supply model, which will eliminate the need for significant computing power.
At the peak of the current cryptocurrency boom, according to Baird experts, miners were buying up to 35% of all gaming video cards available on the market.
Accordingly, these graphics cards have now flooded into the secondary market.
For experts themselves, the recession in the cryptocurrency market is convenient because it will allow to more accurately estimate the demand for video cards from game enthusiasts.

Intel is losing ground - it could be overtaken for the first time by TSMC in Q2 revenue

TSMC is the undisputed market leader in contract manufacturing services for semiconductor components, while Intel until recently successfully challenged their status as the largest supplier in terms of revenue, but then ceded the title to Samsung.
In the second quarter, TSMC for the first time could surpass Intel in terms of revenue, based on preliminary calculations.Image source: TSMKak reports The Register with reference to analysts' forecasts, summarized Yahoo Finance, experts expect a consistent increase in revenue TSMC in the second quarter by 43% to $ 18.1 billion.
At the same time earnings Intel should consistently fall by 2% to $ 17.98 billion, which will allow TSMC to bypass the processor giant on this criterion.
This comparison is not the most usual, because most analyst agencies do not try to compare revenues Intel and TSMC, because the companies have worked in different market niches.The situation, however, is changing.
It is known that Intel will not only use TSMC's services more actively to create its own components, but will also develop its contract business.
This will allow Intel to become a competitor of TSMC.
However, in the first quarter Intel's contract activity provided the company only $283 mln of income, while TSMC managed to bring in $16.7 bln, so the amounts differ by an order of magnitude.