Barclays analysts gave a review of the chip industry and talked about Nvidia's (NVDA, Financials) Blackwell ramp, Apple's (AAPL, Financials) plans to cut iPhone production, and wider market trends, after undertaking a trip to Asia.
According to analyst Tom O'Malley, now roughly 50% of Nvidia's Blackwell ramp is used, and over the next few quarters it is expected to rise to 80%. With this degree of use, Nvidia's income in the January quarter may be about $6 billion. By April, the company's manufacturing capability is planned to double to 40,000 wafers monthly. By contrast, during the third quarter its Hopper products reached 600,000 units monthly manufacturing volume.
Although Blackwell-Ultra solutions are not yet included into the supply chain, O'Malley pointed out that they should increase with the launch of single-die solutions early next year. While manufacture of the TPU v5 chips is likely to stall between January and April, resulting in a brief drop in numbers before a major rise in July, Google's (GOOG, Financials) TPU v6 chips are scheduled to join the supply chain by late Q2 2025.
Manufacturers of application-specific integrated circuits are aiming for the 3-nanometer node in 2026 in advanced chip fabrication. O'Malley said, nevertheless, that businesses like Broadcom (AVGO, Financials) and Marvell (MRVL, Financials) are not expected to lose market share. While AMD's (AMD, Financials) AI accelerator products—the MI300 and 325—saw a rise in orders in the fourth quarter but are likely to show a sequential drop in the first quarter of 2025. Early data for AMD's Xilinx subsidiary shows double-digit year-over-year growth, but momentum may slow early next year.
Premium flagship Android smartphones are doing very well in the smartphone market, which helps Qualcomm (QCOM, Financials). Although Qualcomm is also gaining from aggressive pricing in the low-end market, the company's Snapdragon 8 Gen 4 chip has proven success in fetching premium price. O'Malley also said that as Samsung Electronics (SSNLF, Financials) struggles with its own 3-nanometer ramp, Qualcomm is probably securing 100% of the Samsung Galaxy S25 CPU supply. Mid-tier smartphone weakness is predicted to affect vendors like Skyworks Solutions (SWKS, Financials) and Qorvo (QRVO, Financials).
O'Malley noted conflicting indications about Apple iPhone manufacturing, with recent figures indicating a possible 10% to 15% drop in unit output for the March quarter. Featuring an Apple modem, the iPhone SE is scheduled for a late Q1 release and volumes are estimated to reach 25 million devices.
O'Malley said in the memory industry that although NAND demand is still sluggish, demand for DRAM is promising; mid-to-high teens increase projected in 2025. While demand for high-bandwidth memory is surpassing previous estimates, supply limitations might help to stabilize costs.
O'Malley predicts that capital expenditures for 2025 will stay flat; Taiwan Semiconductor (TSM, Financials) is focusing on moving manufacturing nodes from N5 to N3. Samsung's capacity to scale is being limited by its difficulties with 3-nanometer yields as well. With less development than expected by market forecasts, Barclays anticipates wafer fab equipment investment to reflect these constraints.
Based on Barclays' research, the semiconductor sector shows mixed development possibilities with variances across businesses and sectors.
