China remains the world's leading car market, and in recent years has become a major contributor to the growth of electric vehicles on the international level. Nvidia has predicted this automotive section will become a billion-dollar industry; however, its quarterly revenue has recently seen its first downturn in more than one year. Other automotive chip businesses have also noted sequential dips in their respective revenue figures for this business.
BEIJING — U.S. chipmaker Nvidia this week far exceeded analysts' expectations for the majority of its income, barring the automotive section. The automotive segment chiefly sells chip systems for assisted driving, which CEO Jensen Huang applauded as the company's "next billion-dollar business" last year. Nevertheless, the unit's growth has since diminished this year, and Huang refrained from repeating his statements in the most recent earnings call. For the three-month period ending July 30, automotive revenue dropped 15% from the prior quarter, the first consecutive decrease in over a year.
The FactSet analyst poll estimated a segment revenue of $309.3 million, yet it came in at only $253 million. Colette Kress, Nvidia's Chief Financial Officer, explained in a statement on the quarterly results that this was due to declining auto demand, particularly in China. However, the revenue derived from self-driving systems enabled automotive revenue to increase by 15% from the previous year. Automotive revenue, although still of minor importance compared to the company's total operations, has seen a great surge from just over $100 million per quarter two years back.
China is the biggest car market in the world and has in recent years become a leader in spurring the global trend towards electric vehicles. Competitors such as BYD and Xpeng, who emphasise technological attributes, are giving traditional car firms a run for their money. Counterpoint Research's Associate Director Brady Wang declares that Chinese original equipment producers make up the majority of Nvidia's customer base. He explicated that the decrease in automotive income anaemically may be the consequence of an overabundance of stock among Chinese manufacturers, as well as their downward revisions of the sales targets for up-market cars in the next two quarters.
Nio, who specialize in electric cars of superior quality, is due to provide their quarterly results on Tuesday. Earlier in the month, Xpeng experienced a bigger-than-anticipated deficit in the second quarter. Xpeng is one of the small number of local electric car companies that have installed driver-assist software in certain cities in China. Tesla's "Full Self-Driving" technology for urban road transport hasn't been completely launched yet in China. On Thursday, Xinzhou Wu, former head of autonomous driving at Xpeng, announced he is beginning his new role at Nvidia on Friday, as per his statement on social media with a post featuring an image of himself alongside Xpeng CEO He Xiaopeng and Huang from Nvidia.
Wang from Counterpoint voiced that Nvidia's items are mostly present in the high-end auto sector. He went on to say that "in the mid-level marketplace, NVIDIA runs into competition from other merchants, including Horizon Robotics, Mobileye, and some startups." He indicated that other automotive semiconductor companies have had successive revenue reductions in this area as well.
Analog Devices announced automotive revenue of $747.6 million on Wednesday, a 5% decrease from the prior quarter. David Wong, a researcher at Nomura, commented on the situation in a report on Thursday, noting that Mobileye's and Qualcomm's automotive chips likewise exhibited quarter-on-quarter drops. Wong suggested that Analog Devices might be indicative of the automotive chip cycle peaking.
In February 2022, Nvidia reported in their annual report that they had $11 billion in automotive projects lined up over the following six years. One year later, Nvidia announced in their annual report that their automotive project pipeline was worth $14 billion in the next six years.
In May, Nvidia reported that quarter-on-quarter automotive revenue growth had moderated due to some NEV customers in China adjusting their production schedules to accommodate slower-than-expected demand growth. The company noted that this dynamic was likely to continue throughout the rest of the calendar year. July saw a 3.6% decline in the retail sales of new energy passenger cars compared to June, which totalled 641,000 vehicles. Despite this, the China Passenger Car Association noted that sales for the first seven months of the year had increased by 36% from a year ago. This slowdown has occurred as the penetration of new energy vehicles, which include hybrid and battery-powered cars, had reached around one-third of new passenger cars sold in China by this year, as reported by trade association data.
To get the latest information on electric vehicles, batteries and chips, check out CNBC Pro. The competition in the chip business is becoming more intense. A Chinese stock saw a 30% boost in five days. Tesla's involvement with humanoid robots is predicted to help the five global supply chain stocks, according to HSBC. As investors' attention moves to EVs, experts anticipate auto stocks to increase substantially.
The chip battle is escalating. This Chinese stock saw a 30% surge in a period of five days. HSBC believes Tesla's entry into humanoid robotics will be a boon to five different stocks in the associated supply chain. As attention of investors drifts toward electric vehicles, analysts feel these auto stocks will climb in value.
Over the long-term, car producers still intend to acquire components for assisted driving features. Hesai, which produces light detection and ranging (LiDAR) gadgets generally used for driver-assistance systems, disclosed second-quarter revenue of 440.3 million yuan ($60.7 million), surpassing the firm's prior guidance. More than 60,000 assisted-driving LiDAR units were shipped in 2020 and the company has already outdone this figure in the first half of this year. As per CEO David Li, the number of units should increase more than twofold by the end of this year. He added that six car makers are utilizing Hesai’s technology in 2021, however this number is predicted to be 11 next year. He said that the supplied hardware does not create the same impact as the comprehensive experience produced by original equipment manufacturers for the 'Advanced Driver-Assistance System' (ADAS). Hesai has now declared deeper cooperation of its products with Nvidia's autonomous driving system and rehearsal environment.
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