Chip designers, in the third quarter only AMD, Xilinx and Realtek smile

According to the latest analysis of TrendForce, several US companies engaged in chip design (and without production facilities) have highlighted a drop in turnover in the third quarter in the wake of the trade war between China and the United States (in the last few days a first agreement has been signed) and by virtue of the ban to Huawei, inserted in the Entity list, or a list of companies with which it is forbidden to do business.

According to TrendForce senior analyst, C.Y. Yao, Broadcom's revenue fell significantly due to the choices made by the Trump administration that blacklisted Huawei, the company's main customer. Broadcom suffered from three consecutive quarters of falling sales, with the most sensitive one reaching 12.3% in the third quarter.

Qualcomm also suffered from commercial tensions, in addition to the fact that Huawei has intensified the shipments of its phones with homemade hardware, thus impacting the sales of other brands and indirectly on Qualcomm's turnover. The US company also suffered from competition from MediaTek and the Chinese Unisoc, in addition to the absence of demand for 5G smartphones, which reduced sales by 22.3% on an annual basis, the biggest drop in the top 10 companies engaged in chip design.

Nvidia, the third largest, while maintaining careful control of its inventory of gaming graphics cards, suffered a 9.5% drop in turnover on an annual basis.

AMD and Xilinx were the only two US designers to show an increase in turnover. Due to the continuing shortage of Intel CPUs, AMD has been able to expand its shares in the notebook and desktop markets by increasing its Q3 revenue by 9% year on year. All Xilinx product lines, including datacenters, industrial solutions, networking and automotive products, saw strong demand with double-digit growth in sales in the third quarter with + 11.7% on an annual basis.

Marvell posted excellent revenues in the first half of 2019 thanks to strong demand for its storage solutions, although this demand dropped in Q3. Huawei was one of the main customers of its network chips and the inability to do business with the Chinese company resulted in a 16.5% drop in revenue on an annual basis.

Realtek posted 30.5% year-on-year growth in Q3 2019, thanks to sales of audio, Ethernet and TV products. MediaTek's third-quarter revenues decreased only 1.4% year-on-year due to the excellent demand for smartphone chipsets and a recovery in demand in the consumer electronics field.

Due to the sharply declining results of the top three US chip companies, the overall turnover of this industry branch showed a downward trend in 2019. But the future could be better: the first US tariff agreement and China suggests a relaxation of tensions. Who knows what will happen with Huawei.

However, if U.S. companies manage to get around the various restrictions, the chip design market should return to growth in 2020 in view of a recovery in the sector for devices such as servers and smartphones, as well as emerging technologies such as 5G and artificial intelligence. .