As CES 2023 draws to a close, much of the attention in the chip world has been on companies like Advanced Micro Devices Inc. and Nvidia Corp., but one lower-profile chipmaker looks better positioned. at the end of the convention.
Morgan Stanley analyst Joseph Moore said there was still a lot of caution about overall chip demand, especially with the softness in China, but automobiles appear to be one of the strong themes at CES. 2023, he said.
“Areas that have been weak remain somewhat weaker – notably memory, semi-cap and generally PC and cloud builds – while markets that have been strong (like automotive and industrials) remain strong but with delivery times clearly starting to normalize, likely indicating longer-term revenue pressures, especially in a weaker economy,” Moore said.
“Yet the longer-term themes remain positive, particularly for automobiles (which are increasingly front and center at CES), around themes such as electric vehicles, ADAS and autonomy.”
Such was the case when Nvidia Corp.
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said on Tuesday that it was in partnership with Hon Hai Technology Group
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or Foxconn, better known as the maker of Apple Inc.
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iPhone, to make electric vehicles that use Nvidia’s Drive Orin chips and sensors, and bring its GeForce Now video game streaming service to cars made by Hyundai Motor Group
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and Swedish electric vehicle maker Polestar.
“We generally think Nvidia’s numbers are probably correct from here, although there has been some caution about selling into China for games, and a clear awareness that even if the company’s position in the cloud is very good, this pressure on cloud budgets is leading to somewhat lower visibility,” Moore said. “But we would say we generally think they’ve gotten past the worst of the pressures in their business, unlike most semiconductor groups where there’s still likely some downsizing to come.”
Meanwhile, Advanced Micro Devices Inc.
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used the CES keynote to introduce the Instinct MI300 chip as “the world’s first data center-integrated CPU + GPU”. The combined central processing unit and graphics processing unit for AI inference, the months-long process where data centers spend millions of dollars a year in electricity to train and develop intelligence artificial. AMD CEO and President Lisa Su said the MI300 can reduce the time needed for an inference modeling process from months to weeks.
But one chipmaker that isn’t getting much attention seems to be emerging from the best-positioned CES for the year: ON Semiconductor Corp.
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which focuses on electric vehicles and advanced driver assistance systems as key growth drivers, leveraging its historical position in automotive chips.
“In particular, the company’s push towards [Silicon Carbide] remains on track and expect to end the year at a pace where the majority of the crystal that drives the business is internally sourced,” Moore said. “The company remains confident that demand in the EV space will far exceed supply for a long time to come and has therefore shifted its focus to production-side execution.”
Citi Research analyst Christopher Danley hailed ON as the most bullish chipmaker at CES 2023.
“ON remains on track to triple annual silicon carbide revenues from approximately $300 million in 2022 to $1.0 billion in 2023,” Danley said. “The company said it’s sold out through 2023.”
But ON aside, Danley said everyone at CES was “nervous” about “cracks” in data center demand, “and they should be.”
“There was a nervous tone about the data center outlook with many executives and investors cautious and talking about ‘uncertainty’ in the data center outlook for both hyperscalers and enterprise customers,” Danley said. . “We continue to believe that the data center correction will occur given a host of data points and leading indicators.”
In early December, Danley said his audits “indicate that data center end market order rates are fading with the decline in the enterprise end market (approximately 40% of the data center end market) and Facebook.” , which is owned by parent company Meta Platforms Inc.
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“We continue to expect a correction in the data center end market in 1H23,” Danley said.
That said, Danley said his first choice was and continues to believe a correction is inevitable. We remain cautious on the semis until all end markets and companies correct and our top pick remains chipmaker Analog Devices Inc.
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Back to automobiles: Ambarella Inc.
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On Thursday, Ambarella announced its partnership with Continental AG
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developing hardware and software for assisted driving using AI with the ultimate goal of an autonomous driving system. The companies hope to have systems in production by 2026.
Moore said Ambarella’s technology “continues to impress” and said the Continental partnership will provide shared software revenue, but with the bulk going to Continental.
At CES 2023, “the companies are showcasing a complete ADAS L2+ implementation for a 10-camera system running on a single chip, which by AMBA used only 8% of the chip’s compute value.”