How did the era of NVIDIA come with the "airdrop" of ChatGPT? (I)

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2023-09-06 14:53:56 718

Ranking of semiconductor manufacturers based on sales revenue in Q2 2023

On August 14, 2023, Semiconductor Intelligence, a research firm in the United States, released the ranking of the top 15 semiconductor manufacturers in terms of sales revenue for the second quarter (Q2) of 2023.

However, I was disappointed with this ranking because the ranking of Taiwan's*(Taiwan Semiconductor Manufacturing Company) was unknown. Therefore, I looked at TSMC's financial report data and added it to the semiconductor intelligence rankings.

Figure 1 Ranking of the top 15 semiconductor manufacturers in terms of sales revenue (Q1 and Q2 2023)

Based on the results, the top 15 semiconductor manufacturers' rankings for the second quarter are as follows:*is in first place, Intel is in second place, Samsung is in third place, NVIDIA is in fourth place, Broadcom is in fifth place, and Qualcomm is in sixth place (the rankings of fourth and fifth places are predictions).

Among Japanese manufacturers, Renesas Electronics, which has a strong presence in the automotive semiconductor business, ranks 15th. However, Kioxia, which produces NAND, seems to have dropped out of the top 15.

It is worth noting that from the first quarter to the second quarter of 2023, NVIDIA grew by 69.2%. NVIDIA uses a fiscal year (FY) for accounting purposes, rather than a calendar year (CY) (Figure 2). Therefore, the timing of their financial report differs from Intel and Samsung, who announce their reports in CY. As a result, NVIDIA's sales revenue is listed as "predicted" in the semiconductor intelligence rankings.

Figure 2 The difference between NVIDIA's fiscal year (FY) and calendar year (CY).

So, where does NVIDIA really rank? Is it truly in fourth place?

In this article, we first examine NVIDIA's quarterly sales data. Next, I will attempt to compare the sales figures of TSMC, Intel, Samsung, and NVIDIA, which are the top four semiconductor manufacturers. Additionally, the explosive popularity of generative AI, such as the release of OpenAI's "ChatGPT" on November 30, 2022, has contributed to NVIDIA's rapid sales growth. Apart from that, I will also discuss the prospects of NVIDIA potentially playing a dominant role in the sales rankings of semiconductor manufacturers in the future.

Comparison between the top three semiconductor manufacturers and NVIDIA

Figure 3 shows the quarterly sales revenue and operating profit trend of NVIDIA. As mentioned in the previous section, NVIDIA reports its performance based on its fiscal year (FY). Therefore, Q1 2024 refers to February to April 2023, Q2 2024 refers to May to July 2023, and the predicted Q3 2024 corresponds to August to October 2023 for NVIDIA.

Figure 3: NVIDIA Quarterly Sales Revenue and Operating Income (NVIDIA Forecast for Q3 2024), Source: NVIDIA Financial Report.

Looking at Figure 3 again, we can see that the quarterly sales revenue increased from $7.2 billion in Q1 2024 (February to April 2023) to $13.5 billion in Q2 2024 (May to July 2023), indicating a doubling in scale.

How can we compare this fiscal year (FY) data of NVIDIA with TSMC, Intel, and Samsung, which report based on calendar year (CY) settlements? It is difficult to make a consistent time-based comparison. For companies like TSMC, sales figures are reported for the last few months of each quarter, specifically in March, June, September, and December. To address this, I have created a chart plotting sales revenue for April, July, October, and January (Figure 4).

Figure 4: Quarterly Sales Revenue of Intel, Samsung, TSMC, and NVIDIA (End of Accounting Period for Each Company)

Intel held the top position until March 2017, but Samsung, which experienced rapid growth due to the memory bubble, took the lead from June 2017 to September 2018. However, with the onset of the memory downturn, Intel regained the top position after December 2018.

For a period of time thereafter, Intel remained in the first place while Samsung ranked second. However, when the special demands driven by the COVID-19 pandemic began to decline in 2022, Intel's sales rapidly declined after December 2021. Samsung, as well as TSMC, which had been steadily growing since 2019, surpassed Intel after June 2022 and September 2022, respectively, with*taking the first position. Since December 2022, TSMC's sales have also experienced a significant decline.

In this context, NVIDIA witnessed a significant increase in sales from April to July 2023. Although there is a one-month difference in settlement dates, from Figure 4, it can be observed that around June to July 2023,*was in the first place, followed by NVIDIA, Intel, and Samsung.

Moreover, if TSMC's sales continue to decline after September 2023, it is not far-fetched to expect NVIDIA, with sales reaching $16 billion in October of the same year, to take the top spot. If this happens, NVIDIA, founded in 1993, would become the top semiconductor company in terms of revenue for the first time in its history.

But what is driving NVIDIA's rapid progress?

To be continued...

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How did the era of NVIDIA come with the "airdrop" of ChatGPT? (I)

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