As of August 6, international giants such as Texas Instruments, STMicroelectronics, Renesas Electronics, Infineon, NXP, and ON Semiconductor have all announced their latest second quarter revenue (third quarter financial report) performance reports. From the data, the latest quarterly reports of major manufacturers have declined significantly compared with the same period last year, but all of them said that demand will gradually recover. The latest financial reports of the top ten semiconductor manufacturers.

After experiencing the "destocking" downturn in 2023, the semiconductor industry has shown signs of recovery under the new wave of demand led by generative artificial intelligence and a series of cutting-edge technologies. The latest data from the Semiconductor Industry Association (SIA) shows that in the second quarter of 2024, the semiconductor industry achieved substantial growth, with global sales reaching US$149.9 billion, an increase of 18.3% compared with the second quarter of 2023. This data reflects the recovery trend and potential of the semiconductor market.

As of August 6, international giants such as Texas Instruments, STMicroelectronics, Renesas Electronics, Infineon, NXP, and ON Semiconductor have all announced their latest second-quarter revenue (third-quarter fiscal year) performance reports.

From the data, the latest quarterly reports of major manufacturers have declined significantly compared with the same period last year, but all said that demand will gradually recover and is expected to resume continuous growth.

01 Texas Instruments

Analog chips begin to recover, with the Chinese market performing well

Texas Instruments has the industry's broadest customer base and largest product range. Its financial report indicators often reflect the prosperity of the semiconductor market and are known as the "barometer" of semiconductors.

On July 23, Texas Instruments released its second-quarter financial report, showing that its revenue in the second quarter was $3.82 billion, down 16% year-on-year and up 4% month-on-month. Its net profit was $1.127 billion, down 35% year-on-year, which has been declining for seven consecutive quarters, but it is in line with the $3.82 billion generally expected by Wall Street analysts, and achieved a positive growth of 4% on a month-on-month basis, suggesting that analog chips with continued sluggish demand are showing signs of recovery.

In terms of subdivisions, the revenue of the analog department was $2.928 billion, down 11% year-on-year, and the operating profit was $1.047 billion, down 28% year-on-year; the revenue of the embedded processing department was $615 million, down 31% year-on-year, and the operating profit was $80 million, down 75% year-on-year; the revenue of other departments was $279 million, down 22% year-on-year, and the operating profit was $121 million, down 37% year-on-year.

Haviv Ilan, president and CEO of Texas Instruments, said: Revenue in the second quarter was down 16% year-on-year and up 4% quarter-on-quarter. The industrial and automotive businesses continued to decline quarter-on-quarter, while all other end markets grew.

In addition, Texas Instruments performed well in the Chinese market in the second quarter, with a quarter-on-quarter growth of nearly 20%, which means that Chinese customers have fully adjusted their inventory.

02 STMicroelectronics

Demand for automotive products continues to be sluggish

On July 25, STMicroelectronics released its second quarter financial report for 2024 and once again lowered its full-year performance forecast.

Financials show that STMicroelectronics' net revenue in the second quarter was US$3.23 billion, down 25% year-on-year, and its net profit was US$353 million, a 64% drop from more than US$1 billion in the same period last year, and more than 30% from the first quarter.

Throughout the first half of the year, STMicroelectronics' cumulative revenue was US$6.7 billion, down 21.9% year-on-year, and revenue from MCU, power devices, discrete devices and other businesses all declined.

Specifically, the Analog, MEMS and Sensors Sub-Product Division (AM&S) suffered a decline in imaging business, resulting in a 10.0% decrease in revenue and a 44.5% year-on-year decrease in operating profit to US$144 million. The operating profit margin fell from 20.0% in the previous year to 12.4%.

The Power and Discrete (P&D) Sub-Product Division's revenue fell by 24.4%, and operating profit was significantly reduced to only US$110 million, a year-on-year decrease of 57.9%. The operating profit margin also dropped sharply from 26.4% to 14.7%.

The revenue of the microcontroller sub-product division (MCU) dropped sharply by 46.0%, mainly due to the downturn in the general microcontroller business. Operating profit was only US$72 million, a sharp drop of 87.1% from the same period last year, and the operating profit margin also dropped sharply from 37.2% to 8.9%.

However, in the digital IC and RF sub-product division (D&RF), although the decline in the ADAS business had a negative impact of 7.6% on overall revenue, the growth of the RF business alleviated this downward trend to a certain extent. Even so, operating profit fell from US$196 million to US$150 million, a decrease of 23.8%. Although the operating profit margin remained at a relatively high level of 29.1%, it still declined compared with 35.2% in the previous year.

Jean-Marc Chery, President and CEO of STMicroelectronics, said: The order situation of industrial customers did not pick up in the second quarter, and the demand for automotive products also declined. Second quarter net revenue was above the mid-single digit of our business expectations, with growth in personal electronics offset by lower-than-expected automotive revenue. Gross margin was in line with expectations.

03 NXP

Automotive and communications infrastructure markets remain weak

On July 23, NXP released its second quarter 2024 financial report. The financial report shows that NXP's second quarter revenue was US$3.13 billion, a year-on-year decrease of 5%, GAAP operating profit margin was 28.7%, and non-GAAP operating profit margin was 34.3%. Although the growth of the industrial, IoT and mobile markets has made up for the weakness of the automotive and communication infrastructure markets, total revenue still hit the largest decline in nearly four years.

By business division, the largest department, automotive chip revenue, was US$1.728 billion, a year-on-year decrease of 7% and a month-on-month decrease of 4%; industrial and IoT chip revenue was US$616 million, a year-on-year and month-on-month increase of 7% respectively; mobile chip revenue was US$345 million, a year-on-year increase of 21%, a slight decrease of 1% month-on-month; communication infrastructure and other market revenue was US$438 million, a year-on-year decrease of 23%, but a month-on-month increase of 10%.

In NXP's revenue structure, the automotive business accounts for more than 50%. The decline in NXP's automotive chip revenue largely shows that the demand for automotive chips is warming up, and the overall recovery of the chip market still needs time.

However, Kurt Sievers, president and CEO of NXP, said: "NXP achieved quarterly revenue of $3.13 billion, in line with our guidance target, and the performance of all key terminal markets was in line with our expectations. With the second quarter results and guidance for the third quarter, NXP has successfully passed the cyclical trough of the business and is expected to resume continuous growth."

04 Renesas

Although automotive business revenue has increased, caution is needed

On July 25, Renesas released its second quarter financial report for 2024. The financial report shows that Renesas achieved revenue of 358.8 billion yen (currently about US$2.438 billion) in the second quarter, but its operating income and net profit were low, with operating profit of 110.6 billion yen (about US$751 million) and a profit margin of 30.8%, a year-on-year decrease of 14.3; net profit was 96.7 billion yen (currently about US$657 million).

From the quarterly revenue trend, it fell 2.7% year-on-year and increased 2.0% month-on-month. Excluding the impact of foreign exchange, it fell 8.6% year-on-year and fell 0.4% month-on-month. The automotive business grew 11.5% year-on-year and 5.6% month-on-month; while the IoT business fell 24.5% year-on-year and 5.5% month-on-month. In terms of free cash flow, there was an increase in the second quarter.

In terms of inventory levels, DOI increased to 103 days month-on-month, mainly due to the expansion of the chip library, which drove the increase in work-in-progress. Channel inventory increased month-on-month to 11 weeks, with automotive inventory rising as expected, but to a lesser extent. The rise in IoT inventory is due to changes in trade flows, which have led to an accumulation of overall inventory.

Although the automotive business revenue increased, Renesas CEO Hidetoshi Shibata said earlier that his view on the automotive industry has become cautious. In terms of non-automotive business, the outlook for the industrial market has been adjusted significantly, especially in the field of factory automation.

For the next quarter, Renesas expects third-quarter revenue to reach 348 billion yen (plus or minus 7.5 billion yen), which is lower than the same period last year.

Renesas had expected growth to bottom out in the second quarter, but now it will bottom out in the third quarter. Renesas expects demand to gradually recover from the fourth quarter.

05 Infineon

Recovery in target markets is slow, inventory levels in many regions exceed terminal demand

On August 5, Infineon Technologies AG announced its third quarter results for fiscal year 2024 (ending June 30, 2024). The financial report shows that its revenue and earnings in the third quarter of fiscal year 2024 increased slightly, with revenue reaching 3.702 billion euros (currently about 4.041 billion U.S. dollars), a slight increase of 70 million from the previous quarter, and profit reaching 734 million euros (currently about 801 million U.S. dollars), a year-on-year decrease of 31%; net profit was 403 million euros (currently about 440 million U.S. dollars), lower than the expected 447 million euros, and the profit margin was 19.5%.

In comparison, although it showed a slight upward trend year-on-year, it still decreased slightly month-on-month. Infineon's revenue in the third quarter of fiscal year 2023 was 4.089 billion euros, the department's performance was 1.067 billion euros, and the department's performance profit margin was 26.1%.

Further improvement is expected in the fourth quarter of fiscal year 2024. The full-year forecast is well within the previous guidance range.

Jochen Hanebeck, CEO of Infineon Technologies, said: "Infineon Technologies is performing well in a market environment that remains challenging. The recovery in our target markets is progressing slowly. The prolonged weak economic momentum has led to inventory levels that exceed end demand in many regions. In addition to managing the current demand cycle, we are committed to further strengthening our competitiveness with our 'Step Up' structural improvement program."

06 TE

Artificial intelligence projects drive significant growth in communications business

On July 24, TE Connectivity announced its third fiscal quarter results as of June 28, 2024. The financial report shows that TE Connectivity achieved net sales of US$4 billion in the third fiscal quarter, a slight decrease of 1% year-on-year. The operating profit margin reached 19%, and the adjusted operating profit margin further climbed to 19.3%, an increase of 200 basis points compared with last year.

It is worth mentioning that TE Connectivity particularly emphasized the strong performance of the automotive business in this quarter, as well as the significant growth of the communications business driven by artificial intelligence projects.

Terrence Curtin, CEO of TE Connectivity, said: "Despite lower vehicle production, our automotive business achieved 4% organic growth and three-quarters of the industrial segment continued its growth trajectory. In the communications segment, our sales Growth of more than 20%, record order volume, driven by the momentum of artificial intelligence projects, fourth-quarter earnings and profit margins are expected to achieve double-digit growth."

07 Samsung

Artificial intelligence drives demand for HBM, DDR5 and server solid-state drives

On July 31, Samsung Electronics announced its second-quarter financial results ending June 30, 2024. The financial report shows that total revenue was 74.07 trillion won (currently about US$53.829 billion), a year-on-year increase of 23.42%, and gross profit was 29.76 trillion won (currently about US$21.628 billion), not only higher than the 18.36 trillion won in the same period last year, but also higher than the 26.03 trillion won in the previous quarter; net profit was 9.84 trillion won (currently about US$7.151 billion), higher than the 6.75 trillion won in the previous quarter, and a sharp increase of 475.44% compared with the 1.71 trillion won in the same period last year.

Behind this series of brilliant achievements is the strong pull of artificial intelligence applications on high-bandwidth memory (HBM), DDR5 and server solid-state drives. Favorable memory market conditions have driven up the average selling price (ASP), and strong sales of OLED panels have also contributed to the performance.

In view of the continued surge in demand for artificial intelligence servers, Samsung has made it clear that it will increase its production capacity layout in high value-added products in order to occupy a more advantageous position in future competition.

08 Micron

AI demand promotes the recovery of the storage industry

Micron announced its third quarter performance report for fiscal year 2024 ending on May 30, 2024 on June 26. The report showed that revenue reached US$6.81 billion, which not only significantly exceeded the US$5.82 billion in the previous quarter, but also achieved an 81.5% increase from US$3.75 billion in the same period last year, exceeding market expectations of US$6.661 billion. . ‌

Net profit was US$332 million, quarterly operating profit was US$941 million, and adjusted operating profit margin was 28.1%, all exceeding market expectations. ‌

This achievement is due to the recovery of the storage industry, especially the increase in prices of DRAM and NAND products. ‌Although actual shipments have not changed much, ‌price increases have become the main factor in the performance recovery. ‌

Sanjay Mehrotra, president and CEO of Micron Technology, said: "Strong AI demand and strong execution enabled Micron's fiscal third quarter revenue to increase 17% sequentially, exceeding our expectations. We have strong performance in high-bandwidth memory (HBM) and other high-end Share of profitable products is increasing, and our data center SSD revenue hit an all-time high, demonstrating the strength of our AI portfolio in DRAM and NAND. We are excited about the expanding AI-driven opportunities ahead and are ready for 2025. Achieve a solid revenue record for the financial year.”

09 SK Hynix

Market demand for high value-added products such as HBM3E and DRAM has recovered

SK Hynix announced its second quarter 2024 financial results on July 24. The report showed that in terms of revenue, SK Hynix's consolidated revenue reached 16.4233 trillion won (currently about 11.935 billion U.S. dollars), which not only increased by 125% year-on-year, but also increased by 32% month-on-month, setting a record high.

In terms of profit, its operating profit and net profit reached 5.4685 trillion won (currently about 3.974 billion U.S. dollars) and 4.12 trillion won (currently about 2.994 billion U.S. dollars), respectively, with operating profit margins and net profit margins of 33% and 25%, respectively. ‌This profit level has returned to the 5 trillion won level since 2018. ‌

SK Hynix's performance is mainly due to the increase in sales of high value-added products and the recovery of market demand. ‌ In particular, in terms of DRAM, the sales proportion of high value-added products such as HBM3E and server DRAM, which the company has mass-produced and supplied since March, has expanded. In addition, HBM's sales increased by more than 80% month-on-month and more than 250% year-on-year, which further drove the company's performance improvement.

010 Summary

The automotive and industrial application markets are polarized, and artificial intelligence drives memory growth.

Overall, the financial situation of most companies has shown twists and turns. Compared with the same period last year, the revenue has shown a downward trend. However, there is a trend of recovery on a month-on-month basis, which undoubtedly indicates that the industry is emerging from its cocoon and gradually getting out of the trough and regaining the upward channel.

In the sub-sectors, the market performance of automotive and industrial applications shows a distinct polarization. Companies represented by Renesas Electronics and TE Connectivity have achieved remarkable results in the automotive electronics sector, thanks to the booming development of smart driving and electric vehicles. However, NXP Semiconductors (NXP) and STMicroelectronics (STMicroelectronics) encountered headwinds in this wave of market conditions, showing a structural adjustment in market demand.

In the memory industry, especially in the fields of dynamic random access memory (DRAM) and flash memory (NAND), Micron Technology (Micron) and South Korea's SK Hynix (SK Hynix) have achieved outstanding financial performances thanks to the rise in market prices, demonstrating the power of the industry's cyclical recovery. It is particularly worth mentioning that Samsung Electronics and SK Hynix have both achieved impressive performance growth due to the surge in demand for high-bandwidth memory (HBM) and innovative products related to artificial intelligence, proving the importance of laying out at the forefront of technology.

At the same time, as important application areas for semiconductor products, the personal computer and smartphone markets have also shown positive signals. It is expected that sales of both will increase by 4% in 2024. This trend undoubtedly constitutes a key support for the semiconductor industry chain.

It is foreseeable that the application of artificial intelligence and cutting-edge technology is being regarded as the core driving force leading the industry's revival. With the recovery of demand driven by it, the industry is expected to re-enter the track of stable growth.

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