The Six Five team discusses the 2024 Watch List in Semis.
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Transcript:
Patrick Moorhead: Yeah, so here’s the thing, and I did my watch list in terms two parameters, right? Which was market share and momentum. Don’t confuse this with a stock pick, okay? Because God knows what Wall Street is doing, was it baked in the valuation? That’s not what I do, I do more market and product fit type of stuff. So first thing in semi is AI is going to lift all boats, it’s going to be in the data center, it’s going to be in PCs, it’s going to be in smartphones, it’s going to be on the industrial and commercial edge. And you will need new semiconductors to plow that in. So I think some really interesting companies out there that are going to gain share and momentum are going to be AMD, a data center and AI PC. I think they’re being superconservative with their forecasts. Intel, AI PC, I think you’re going to see evidence of 2025 data center competitiveness with a new GPU. And we’re going to see some foundry action, Qualcomm, AI phone, AI PC, they’re getting zero credit for that right now.
And like I said previously, I think we’re going to see a supercycle out there. And I think the memory market’s going to get back to normalcy, and we’re going to see the Samsungs and the Microns do well. Some of the ones that are a little harder to pick would be NVIDIA, which is they crushed it for so long and they’re a trillion plus valuation company. But the question is can they maintain the near 100% non-China market share in AI accelerators? I don’t think that’s going to be possible if AMD gets to 10%. Then there’s companies like TI and Microchip, I don’t even know what they’re doing in AI. And Texas Instruments is kind of the sleepy company that doesn’t want to say anything to anybody. Kind of interested in spaces that are kind of boring, vital but boring. They’re leveraging some of their manufacturing capability to have lock-in and exert pricing pressure on customers.
And then Microchip, where do they even play in the FPGA market? And how do they accelerate AI? And how are they going to do this year? It’s kind of a mystery to me. So that’s it, that’s my Pat Moorhead semiconductor watch list for 2024.
Daniel Newman: Yeah, I think you hit on some good points and since you sort of went first, I’m going to try to be additive where I can. What I’ll say is I agree, it’s become sort of… I was on CNBC yesterday and they kind of asked me my winners. And my whole comment about NVIDIA, it’s just like, “Is that even a topic?” It’s not because they’re not a winner, it’s just because everyone knows that one. And by the way, it’s up a million percent, jokingly, but… And now what they’re going to have to do is how do you keep growing at triple figures over triple figures? We saw this with Zoom during the pandemic, it’s like they came back to earth when they started growing 20% and everyone was like, “Well, this company sucks.” It can’t continue forever, and they actually do have real competition now.
So what I think next year, a couple of my key themes are one is real competition. Meaning that they did get out to that fast start on GPUs, but there’s real competition there, and it’s coming from multiple angles. And that’s going to be a theme of the year, you’re going to have real AMD competition, you’re going to have real ASICs competing, you’re going to have real homegrown silicon. Do not mistake for a minute that these cloud providers do not want to sell lots and lots of homegrown silicon. And so that’s definitely going to be a trend line. I’m all for a big, big buying cycle for PCs, those companies have had a really tough few years. And the AI PC, which still by the way has some work to do in terms of explaining what it really enables for its users, but they will get it right this year and they will create a cycle.
I think the cycle starts a little later than everyone thinks, I think everyone’s thinking about the middle of next year. I think it starts out a little slow, but I think it’s going to pick up by the end of next year and by next Christmas we’re going to see a real tidal wave of buying.
I’m going to make a bit of a call-out on one company because everybody kind of has been very positive on NVIDIA and AMD, but I actually think Intel’s turnaround is in motion. Now, for a few years we’ve been saying it could turn around. I think that event, that AI Everywhere event was a big moment in the Pat Gelsinger reign as CEO of Intel. I think this is the moment, you’re starting to see the market is understanding and accepting that it’s meeting its goals, it’s meeting its timelines. And we want in the country as the US and the world, the allies in the world actually benefit, I don’t know why I said actually, they benefit significantly from a strong Intel. And Intel, even the fact that as we move back to inference, a lot of inference gets done on Xeon. And the cycle of slowing CPU sales and the data centers should see a turn as all this infrastructure gets put into place and we move back towards regular data center compute that’s going to be utilized to inference a lot of this data.
The only thing I’ll say is that automotive is very interesting. I think Qualcomm, which by the way will have an AI PC and has a very powerful early CPU. But on the automotive side, their work and all the effort and investment is going to start to pay off with growth. That company is coming to a really good inflection point. And by the way, it’s been a rough couple of years for Qualcomm, but automotive has held strong throughout. And all that design pipeline, hundreds or maybe even thousands of semis that are going to go into automotive. What they’ve built with their Snapdragon Ride and the automotive platform and all the design wins should start to really bear fruit. That along with a supercycle for phones and a supercycle for PCs, should set up a bit of a comeback after multiple years of depression. So lots of other things I could say, but there’s some things to watch in the semi space.
Patrick Moorhead: Good stuff, man.
Daniel Newman: There’s a lot there, man. We really set ourselves up to leave a lot of good stuff out, didn’t we?
Patrick Moorhead: Yeah, I’m especially glad that you hit on the CSP custom silicon, right? We’ve got Amazon doing training in inference. We’ve got Microsoft showing up with Maya, which is interesting. You see some increased vigor with Google and the TPU. It’d be interesting to see what OCI does, right? Will they create something on their own? My guess is they’re going to partner kind of like they’re doing with Arm Semiconductors with Ampere, which they have an investment. And too it’d be interesting to see if Oracle makes a play for one of these ASIC companies as their valuations are going down.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
