Advanced Micro Devices (NASDAQ: AMD) has had a huge turnaround in the last 5 years as it has increased its profitability via new and improved products. There has been a lot of hype surrounding the competition from Nvidia in particular, but AMD competes with several other companies in the semiconductor market. Thus we decided to look at 3 competitors in the chip-making space.
Nvidia (NASDAQ: NVDA) is an incredibly popular company and a hot name for gamers, A.I., and mobile computing enthusiasts alike. Nvidia is the main competitor to AMD as the two compete in the same markets, each going from strength to strength.
Nvidia has good working relationships, reeling in clients such as Sony, Toyota, and Tesla. In recent news, it has also agreed to buy ARM from SoftBank -- though this is currently under investigation -- which will allow Nvidia to compete in the CPU market alongside AMD and Intel (NASDAQ: INTC). Furthermore, in 2020 it has closed the 1% gap of market share between itself and AMD for GPUs.
Nvidia has been producing GPUs for computers since it was founded, and since then it has built upon its own strengths and now provides chips for artificial intelligence (AI), virtual reality (VR), and many other applications. Raytracing technology, which Nvidia introduced in 2018, has meant that its chips are now widely used in data centers, supercomputers, and in the development of self-driving cars.
In Q1, Nvidia posted record revenue of $5.66 billion, up 84% year-over-year (YoY) and up from the previous quarter. Included in this was its record high of $2.09 billion in revenue from its data center segment, up 79% YoY, this is a direct consequence of increasing data center capacities due to the work-from-home movement. Its gaming sector received a similar pandemic-related boost achieving a record-high revenue of $2.76 billion, up 106% YoY.
Intel is the biggest player in the chip-making space, it holds a 68% market share for GPUs, having lost 1% to Nvidia over the course of the last year. This is a slow but ongoing trend that has been around since 2017. In the CPU market, Intel still holds more than 70% but it has lost ground to AMD, which has taken advantage of Intel's loss caused by the break-up of its 14-year partnership with Apple.
In its most recent quarter, Intel has some tell-tale signs that current circumstances have not been favorable to the company as a whole. Its total revenue for the most recent quarter was down by 1% YoY to $19.7 billion, however, guidance from the last quarter expected less than this, so Intel performed better than predicted. Indeed, the company expects to bounce back with its guidance predicting growth for the year to come.
Looking forward, Intel will continue with its developments in its AI sector, 5G network transformation, and with its subsidiary Mobileye which recently launched its new Mobileye SuperVision product. Along with its other computer vision companies, Intel has been co-developing a driverless platform with the likes of BMW, Fiat Chrysler, and Delphi. This is an area where Intel could become a powerhouse in the future.
Qualcomm (NASDAQ: QCOM) plays a major role in smartphone application processors (APs), leading the market with a roughly 30% share. Whilst it is still leading, it has some of this market share over the last year due to the pandemic-related slowdown of smartphone sales caused by chip shortages. Additionally, Huawei increased its usage of HiSilicon APs after U.S. restriction fears threaten many U.S./China relationships; Qualcomm lost 12% of its Huawei market share.
However, investors were somewhat spooked by its Q1 earnings report. Revenue of $8.23 billion fell just short of the $8.27 billion expected, though it did still represent a 63% jump in sales YoY. Qualcomm said that it is planning for between $7.2 billion and $8 billion in sales in the current quarter, a stronger forecast than analysts tracking the stock expected. This lower revenue can be attributed to the backlog in semiconductor supply, which is slowing the 5G process almost to a halt, particularly as it currently supplies Apple with Smartphone AP's. Although this is likely to change in the future as Apple moves away from external suppliers completely.
Investors should be aware, that Qualcomm is a business that is likely to benefit from the 5G upcycle and will therefore continue to have an edge for any future 5G developments. Qualcomm might not have the same shine as the other three, but it is a good option for any long-term investment.
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