While global trade markets experienced major sell-offs on Monday, semiconductors received a word of optimism.
Chip sales globally were on the rise in June and especially strong in the Americas. For that month, the Americas saw nearly 43% growth in sales over a year earlier, while overall global growth was 18%.
Only Europe and Japan saw declines in June over a year ago with Europe down the most by 11% an Japan down 5%. Globally, total sales reached nearly $50 billion in June, up from $42 billion in June 2023. The sales tally was compiled by World Semiconductor Trade Statistics using a three-month moving average.
The news comes as some comfort to industry officials after 2023 sales declined by 8% from 2022, reaching $526.8 billion, as vendors and their customers adjusted to global supply chain disruptions stemming from the pandemic and trade restrictions.
Semiconductor Industry Association CEO John Neuffer said the market remained strong in Q2, with quarter-to-quarter sales increasing for the first time since 4Q 2023. Sales in 1Q 2024 were down nearly 6% from the prior quarter, but up 15% from 1Q 2023.
Global chip revenues have followed periodic ups and downs for decades and most forecasters predict total sales will top $1 trillion by 2030. That projection was true even well before the introduction of ChatGPT by OpenAI in November 2022, which sparked a huge buying spree of GPUs, mainly from Nvidia, to accelerate training needed for generative AI tasks. Gartner’s Gaurav Gupta has projected the $1 trillion mark might not be reached until 2031 to 2032. Sales of expensive AI chips, some $50,000 apiece or more, will play a role in overall growth.
Monday saw the worst day for the S&P market since September 2022, and markets were down elsewhere over concerns about the US economy after Friday’s disappointing jobs report.
Investors have recently reacted negatively to semiconductor company stocks in what is largely viewed as an adjustment to a historic rise in values in the spring and early summer.
Top performer Nvidia saw a 6% decline Monday after a 107% climb over the past seven months since Jan. 1. Some analysts saw the Monday decline as a reaction to reports Nvidia's Blackwell chips may face delays of three months or more due to design flaws, potentially hurting customers such as Microsoft and Google. Nvidia has only told media outlets including Reuters that Blackwell sampling has started and production is on track to ramp in the second half of the year. In May, CEO Jensen Huang said Blackwell would ship in the second quarter.
Nvidia stock was at $99.82 on Monday afternoon after reaching a high of $135 on June 18, which was eight days after the company split each share 10-to-1 on June 10. Nvidia also crossed the $3 trillion valuation mark in June and alone has more than 10% of global semiconductor revenue.
Intel shares finished Monday down 6% to $20.11 and were down 35% over the previous five days including a crash on word of Intel’s latest earnings report on Thursday. Revenues for the quarter dropped 1% to $12.8, but Intel warned of a tough second half and invoked a $10 billion cost-cutting plan that will slash 15,000 jobs, or 15% of its work force.
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The Philadelphia Semiconductor Index of top semiconductor companies dropped nearly 2% on Monday.