Semiconductor Supply In Automotive Industry Has Caught Up With Demand, AMD and Nvidia Set for Prominent AI and Automotive Role: Analyst

Rosenblatt analyst Kevin Cassidy noted that Mobileye Global Inc MBLY is the latest casualty in the slowing automotive end market. 

The analyst noted that while semiconductor content increases in automobiles are a clear trend, supply has generally caught up to demand. 

Shorter lead times, increasing inventory, higher interest rates, and rising sticker prices are causing a demand slowdown. The analyst flagged that this slower demand environment is continuing.

Cassidy expected to learn some details on the current automotive market at CES this week. 

The analyst will meet with companies with automotive exposure, including Ambarella, Innoviz, Navitas, onsemi, Qualcomm, and Synaptics. 

Qualcomm Inc QCOM has been aggressively updating its Snapdragon XR Platform for many years. 

Cassidy noted Qualcomm as being the leader in virtual reality SoCs. 

Qualcomm's advantage is the pricing, technology, and ecosystem of support leveraged from the Snapdragon core design refined over years of high-volume production in handsets. 

The virtual reality headset market will eventually find the correct feature set that meets consumers' needs, as per Cassidy.

Arm Holdings Plc's ARM licensing pipeline for generative AI licenses is strengthening based on Cassidy's checks in Asia and Silicon Valley in December, which is additive to the already rich v9 architecture roadmap, share gains in PC, DC, and significant royalty rate increases complemented by the new CSS program.

Monolithic Power Systems, Inc's MPWR deepening pipeline of power analog solutions for Nvidia Corp's NVDA current Hopper and next-generation Blackwell have significant implications for the company in terms of strategic relationships (beyond Nvidia), have material secular profitability and growth impact. 

While the industrial and automotive segments of the business likely remain weak or weaker in the March quarter, the analyst noted other segments and AI momentum could offset. Still, he also admitted slight downside risk overall.

Industrial and Automotive remain in a downward trajectory for now, based on his recent checks in Asia, with a bottoming dynamic in the first half of 2024. 

In his universe, the embedded plays with some downside to March quarter consensus views include Lattice Semiconductor Corp LSCC, Microchip Technology Inc MCHP, MPWR, and Texas Instruments Inc TXN.

The analyst noted the FPGA units of Advanced Micro Devices, Inc AMD and Intel Corp INTC, with the downside offsetting the upside from other segments in AMD's case. 

For Intel, the Altera IPO spinoff in the next 2-3 years is appropriately timed, given the bottoming process of the market segment and major

investment in reinvigorating the roadmap after years of mismanagement, the analyst noted.

Cassidy expected a well-attended CES in Las Vegas this week. The analyst expects to see more real-world performance-proof points with integrated NPU functionality with AMD's new Ryzen in his universe.

Hawk Point and the new Intel Meteor Lake.

Apple Inc AAPL has already moved to ARM CPUs over the past several years. 

Still, the Windows world will also move in

this direction with Qualcomm and likely Nvidia, AMD, and possibly Intel on the prospects of incremental efficiency improvements and customer

preference. 

This ARM dynamic will play out in the DC as well, of course. ARM is the big winner of the trend.

The analyst expects Nvidia's Jensen Huang to jazz up CES with a pre-keynote that should incorporate a reiteration of its deep portfolio of silicon solutions, systems, and software.

Autonomous vehicles and robotics (Nvidia Drive) and industrial digitalization (Nvidia Omniverse) should be highlighted as part of Jensen's worldview of waves of adoption of accelerated computing. 

Cassidy expects more detail on the Edge-centric IGX and AGX platforms.

Cassidy also expected a sneak peek at the 3nm-based RTX5000 "Blackwell" gaming GPU.

The analyst expects Micron Technology, Inc MU to be incrementally more bullish on the memory cycle, AI content trends, supply discipline for the industry, and HBM3 DDR5 transitions.

He wants incremental visibility on Marvell Technology, Inc's MRVL AI-centered ramps in custom ASICs and networking AI adjacencies.
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