Source: McKinsey & Company, The Semiconductor Decade: A Trillion Dollar Industry, April 2022. McKinsey is projecting that 70% of the forecast demand will be driven by the automotive, data storage and wireless industries as seen in the following chart: Global consulting company McKinsey is projecting that the global semiconductor industry will achieve one trillion dollars of revenues by 2030 with a compound annual growth rate of between 6% and 8%. This represents a year-on-year growth of 26% whilst noting that the 2020 growth rate was negatively impacted by COVID-19.Īlthough there has been secular demand growth for many years, the chart also shows that the sector can go through sharp cyclical downturns. The World Semiconductor Trade Statistics (WSTS) estimates that the global market had approximate revenues of US$556B in 2021. Source: World Semiconductor Trade Statistics
Global demand for semiconductors has been in a long-term secular upswing as shown by the following chart: Source: Author’s compilation using data from NVIDIA’s 2022 10-K filing. The company currently has 2 reportable operating segments and the 2021 full year sales and margins are shown in the table below: NVIDIA’s key markets include g aming, p rofessional visualization, d ata centre and a utomotive. The key step of manufacturing the semiconductor wafers is performed both by Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics ( OTCPK:SSNLF) ( OTCPK:SSNNF).Īt the time of writing this report, NVIDIA had a market capitalization of US$465B, which makes it the 10 th largest company on the S&P 500. It operates a so-called “fabless” model where it contracts 3 rd parties to perform the various manufacturing steps to get its products to market. It does not directly manufacture semiconductors. NVIDIA purely designs, markets and sells its products. NVIDIA is the 2 nd largest semiconductor company globally by market capitalization behind Taiwan Semiconductor Manufacturing Company ( TSM ). Over the last few years, the company has been expanding its markets into artificial intelligence and autonomous vehicles.
These semiconductor chips are used in several end-markets including high-end PCs for gaming, data centers, mobile computing and auto infotainment systems. It is thought that NVIDIA is the technology leader in the design of graphics processing units (GPUs). NVIDIA Corporation ( NASDAQ: NVDA) is a US based multinational technology company. PonyWang/E+ via Getty Images Business Description
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