Demand for the GeForce RTX 30 Series graphics processing units drove a 31% year-over-year increase in Nvidia’s gaming revenue to $3.6 billion in its fiscal Q1 ended May 1, said Chief Financial Officer Colette Kress on a Wednesday earnings call. “The gaming industry has grown tremendously, with 100 million new PC gamers added in the past two years,” said Kress, citing Newzoo data. “End demand” for RTX graphics cards “remained solid” throughout the quarter, “though mixed by region,” with demand in the Americas staying strong, she said. “We started seeing softness in parts of Europe related to the war in the Ukraine and in parts of China due to the COVID lockdowns. As we expect some ongoing impact as we prepare for a new architectural transition later in the year, we are projecting gaming revenue to decline sequentially in Q2.”
When the semiconductor industry might reach “equilibrium” between supply and demand “seems to be the question that everyone is asking,” Bill Betz, NXP Semiconductor chief financial officer, told a J.P. Morgan investors conference in Boston Tuesday. NXP sees chip supply “incrementally improving” in 2022's second half “but not solving that demand gap that we have,” he said. “If we take out all of the double ordering and triple ordering” that’s prevalent in the supply chain, NXP estimates it’s “still not servicing about 20% of that demand as we go forward,” said Betz. “It’s going to take quite a while to get to equilibrium, and not in 2022, for sure.” NXP “would love to be at 2.4 months” of channel inventory, said the CFO. “Today, we’re at 1.6, 1.5.” To get from 1.5 to 2.4, NXP would need to ship $500 million worth of inventory “into the channel and assume none of it sells through,” he said. “So we have a long way to go to get it back to 2.4.” That’s one “of those leading indicators to understand how much of your demand is really real,” he said. “This is one of our clear indications that we’re far from making or getting to equilibrium.”
Photronics sustained record revenue growth for the fifth straight quarter, as “demand across the board has remained strong,” said Chief Financial Officer John Jordan on an earnings call Wednesday for its fiscal Q2 ended May 1. The company supplies integrated-circuit and flat-panel display (FPD) photomasks to chipmakers and panel manufacturers, and is a bellwether of semiconductor and display industry conditions.
“No one will win” in a China-U.S. tariff war, said a Chinese Foreign Affairs Ministry spokesperson Tuesday, responding to U.S. Trade Representative Katherine Tai’s comments that the Biden administration needs to be “strategic” in deciding whether to lift the Section 301 duties on Chinese imports. “Against the backdrop of high inflation, the removal of tariffs on China by the U.S. serves the fundamental interests of American consumers and businesses,” said the spokesperson. “It will be good for the U.S., China and the world at large.” The U.S. needs to keep “our eye on the ball in terms of how to effectively realign the U.S.-China trade and economic relationship,” Tai told Bloomberg News Monday. “I know there’s a lot of talk around tariffs right now” amid “global economic dynamics,” exacerbated by the “impacts of Russia’s invasion of Ukraine,” said Tai. “All options are on the table in terms of how we address our short-term economic needs.”
Exacerbation of the industry supply chain woes from the COVID-19 lockdowns in China is rendering “a different story for everyone,” Qualcomm Chief Financial Officer Akash Palkhiwala told a J.P. Morgan investors conference Monday. Qualcomm’s sourcing capabilities are “very diversified from a total supply perspective,” he said. It uses Taiwan Semiconductor Manufacturing Co. and Samung as its foundry sources, “and on the backend side, we use a combination of several suppliers, so our exposure to China is limited,” he said. “There's pockets of things we're navigating through” in the supply chain, “but nothing that really directly impacts us at scale,” he said.
The global macroeconomic environment “has definitely deteriorated further and faster” than Snap expected April 21 when it issued second-quarter guidance for 20%-25% revenue growth, CEO Evan Spiegel told a J.P. Morgan investors conference Monday. Snap repeated the warning in an SEC filing Monday evening that sent the stock plunging 43.1% Tuesday, closing at $12.79. Though Snap’s revenue continues to grow year over year in Q2, it’s likely that revenue and profit “will come in below the low end of our guidance range,” said Spiegel. It’s “certainly something that we’re working through along with many other businesses” affected by supply chain issues, inflation, concerns about interest rates and the war in Ukraine, said Spiegel. “There’s a lot to deal with in the macro environment today,” he said. “Our general perspective and strategy has been to invest through it.” Though Snap is “changing some of the pacing” of its hiring, he said, “this is certainly going to continue to be a period of significant investment for the business.”
Qorvo downgraded its projections on global 5G smartphone shipments for calendar 2022 to 650 million-675 million from 700 million-750 million phones because “we also believe the smartphone market itself is also coming down,” CEO Bob Bruggeworth told a J.P. Morgan investors conference Monday. The company supplies RF components to the world’s top smartphone OEMs, and much of the forecast downgrade “has to do with our customers in China, which is one of the growth areas for 5G,” he said. “Consumer sentiment” for 5G in China has been declining, and the COVID-19 lockdowns in Shanghai and elsewhere “continue all the way up to this day,” he said. The war in Ukraine “also is impacting some of the export market for some of our China based handset customers,” plus that of Samsung, in Eastern Europe, he said. “So when we integrated all that, we felt it was best to bring down our numbers for 5G.” Qorvo views this as a “temporary” lull, said the CEO. “We don't see this as a structural change in our end markets.”
EnergyGuide labels for TVs with screen sizes 69.5 inches and larger would need to boost their posted “applicable ranges of comparability for estimated annual energy costs” to $160 at the high range under the FTC’s proposed “routine updates,” says a notice for Wednesday’s Federal Register. That would represent a nearly 65% increase from the maximum $97 a year on a comparably sized TV under existing rules that took effect in July 2015. The estimated energy costs are based on using the TV for five hours a day in the on mode, and 19 hours daily in the standby mode, assuming a household that pays 14 kilowatts per hour for electricity, an increase of 2 cents from the 2015 rule. Comments on the proposed EnergyGuide labeling changes are due July 11.
Demand for semiconductors “has never been stronger or broader,” but the industry's ability to fulfill this growing demand “remains constrained by ongoing supply chain issues,” said Applied Materials CEO Gary Dickerson on an earnings call Thursday for fiscal Q2 ended May 1. The company supplies wafer fab production tools to chipmakers and is a bellwether of semiconductor industry conditions.
The COVID-19 lockdowns in China, which began in late March, “resulted in an even more severe shortage of certain critical components” than before, said Cisco CEO Chuck Robbins on an earnings call Wednesday for fiscal Q3 ended April 30. “This in turn prevented us from shipping products to customers at the levels we originally anticipated heading into Q3.”