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Apple sparks a chip-car blaze
Reports that $Apple (AAPL.US)$ has set a goal of producing a fully autonomous electric car by 2025 would have been enough to set the tech sector and Wall Street on fire with speculation about what an "iCar" might look like. But, when those reports from last week said the key to Apple's car plans is a breakthrough semiconductor platform, that fire of speculation turned into an almost uncontrollable blaze.
Apple (AAPL) as it historically does, is keeping its mouth shut about anything it might be doing on the car front. However, the potential for a new chip technology unlike any other in the auto sector illustrates the role that chip developers are playing in advancing changes in the auto industry. And recent comments from many bellwether chip company executives show how much automobiles are playing a role in their plans for new areas of diversification and growth.
$NVIDIA (NVDA.US)$ reported strong quarterly results on Nov. 17, and not surprisingly, the company's performance was largely driven by its gaming and data-center businesses. Revenue from automotive products was only $135 million, but that was an increase of 8% from a year ago. Nvidia (NVDA) also said that during the quarter, it lined up self-driving truck start-up Kodiak Robotics, British automaker Lotus, autonomous bus manufacturer QCraft, and EV startup WM Motor as customers to use Nvidia's Drive Orin platform for their next-generation vehicles.
In talking about Nvidia's (NVDA) results, Chief Executive Jensen Huang said that the automotive industry also provides an outlet for use of the company's Omniverse virtual technology platform.
"There are 100 million cars. We've heard that the new cars will all have -- will all be -- have the capability to have something like an Omniverse Avatar. And so there's 100 million cars to be $1,000 per car per year," Huang said.
Of course, Nvidia (NVDA) isn't alone among chip companies with plans of building big automotive businesses.
$Qualcomm (QCOM.US)$ has made autos one its primary areas of focus, and on Nov. 3, it reported $270 million in fourth-quarter revenue from automotive sales, a 44% increase from a year ago. At that time, Chief Executive Cristiano Amon said Qualcomm (QCOM) was working with automakers to create "a joint roadmap to build multi-tier, multi-generation, scalable and upgradable platforms for a long-term sustainable business."
Qualcomm (QCOM) wasted little time putting some meat on those auto-plan bones when, on Nov. 17, the company announced a deal to provide its Snapdragon system-on-a-chip technology to BMW for the German automaker's next generation of autonomously driven cars. At its investor day meeting that same day, Qualcomm said such deals should help it boost its automotive-chip revenue from $1 billion this year, to $3.5 billion in 2026.
"This is just the beginning," Amon said of the BMW deal. "It's an incredible opportunity to scale very fast in our auto pipeline."
Other automakers are building closer ties with many large chipmakers. Last week, $General Motors (GM.US)$ said it will work with Qualcomm and other chip companies on semiconductors for its cars, and $Ford Motor (F.US)$ announced a new partnership with $GlobalFoundries (GFS.US)$ centered around jointly developing chip technologies for Ford (F) vehicles.
Tom Caulfied, GlobalFoundries CEO, called the deal with Ford "a key step forward in strengthening our cooperation and partnership with automakers to spur innovation, bring new features to market faster, and ensure long-term, supply-demand balance."
At $Intel (INTC.US)$, the semiconductor giant's Mobileye self-driving car business reported its best-ever quarter in October, with sales of $326 million, or 39% higher than in the same period a year ago. On Intel's (INTC) earnings call, Chief Executive Pat Gelsinger said that with Mobileye, Intel will soon deliver driverless robo-taxi service in conjunction with rental car company Sixt SE. Gelsinger added that Intel (INTC) expects the market for "automotive silicon" will reach $115 billion by the end of the decade "as AVs [autonomous vehicles] begin to move from the garage to the streets."
At the IAA Mobility Conference in September, Gelsinger said that the advancements in chip technology are turning the automobile into "a computer with tires," and left no doubt about how close chip companies and carmakers will work together in the coming years.
"We need you and you need us," Gelsinger said.
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Mikey_Vibez : Ford is now also considering introducing chip designers
Kieron Morley : This article fails to include Micron. None of the chips work without Memory.
Spider-Man to moon Kieron Morley : Memory biz does not expand fast so no good.
Sam White Spider-Man to moon : That's the opportunity here. Processors are sky high but they don't work without memory, and those companies are still solid buys. Long MU..
MHfin Kieron Morley : That part of the game is a commodity like always.
2uEaAZ5u1B MHfin : If that were the case Korea's 2 bigs would have automotive market share of 70%. Micron has 50% of automotive market share despite producing 23% of global DRAM.
H3U3lt3Ycd : I personally don’t like the idea of a self driving car.i want to be the one controlling the car.i don’t want the car to control me.
Happymoooooo : Too much hype in this sector. EV and GPUs companies are in a massive bubble.
4W7smhOHmW : What do all these advanced chips need for success? Memory and storage. Long suffering Micron’s products are essential. Memory and storage chips are the new oil.
sbSeUJwoWL : I am shocked On Semiconductor is not listed they are ready to supply and should be the next NVDA . Check them out https://www.onsemi.com/
This should be a 10 to 20 X's new factory also
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