Edgewater says Monolithic Power Systems will collapse as Blackwell's allocation is 'at risk'.
Investment firm Edgewater Research stated that Nvidia (NASDAQ: NVDA)'s Blackwell line GPU allocation is 'at risk', causing Monolith Power Systems (NASDAQ: MPWR) stock to plummet by 14% in pre-market trading on Monday.
"Performance issues with MPWR's [Voltage Regulator Modules/Power Management ICs] may lead to strict limitations or exclusions of MPWR's allocation at Blackwell. Renesas is taking over B200, and amid rush orders in recent weeks, Infineon (OTCQX: IFNNF) (OTCQX: IFNNY) will take on GB200's allocation," wrote the company's analyst in a note to clients, referencing Japan's Renesas and Germany's Infineon.
Analysts added that the root cause of the issues with monolithic power management ICs is 'unknown,' but feedback suggests a potential connection to failures of products consuming over 700 watts confirmed on Blackwell SKUs early this year. For analysts, this implies that the allocation of monolithic B200 (1,000 watts) and GB200 (1,200 watts) SKUs may be 'limited or non-existent,' potentially resulting in the company shipping only B300A (700 watts).
'We heard that NVDA will be confirming orders for MPWR over the next several quarters, but that NVDA has canceled half of MPWR's backlog and cut all unconfirmed orders,' explained the analyst. 'Renesas is expected to increase Hopper's allocation by 50% in Q1 or Q2 and potentially by around 15% in Q4 2024. We're not aware of any plans for IFX to qualify for Hopper. NVDA engineering seems to have lost confidence in MPWR and decided to concentrate on Renesas and IFX as two major suppliers.'
Analysts also pointed out that the monolithic solution to the Hopper issue is considered by some supply chain partners as a 'temporary measure at the time' in contrast to a true solution to the root cause.
'This poses significant downside risk to MPWR's Enterprise Data segment in 2025, as investor focus on MPWR's AI performance increases, bringing significant risks to the stock. It is currently overshadowing the company's strong results in other segments,' added the analyst.
Monolithic has not yet responded to the comment request from Seeking Alpha.
"Performance issues with MPWR's [Voltage Regulator Modules/Power Management ICs] may lead to strict limitations or exclusions of MPWR's allocation at Blackwell. Renesas is taking over B200, and amid rush orders in recent weeks, Infineon (OTCQX: IFNNF) (OTCQX: IFNNY) will take on GB200's allocation," wrote the company's analyst in a note to clients, referencing Japan's Renesas and Germany's Infineon.
Analysts added that the root cause of the issues with monolithic power management ICs is 'unknown,' but feedback suggests a potential connection to failures of products consuming over 700 watts confirmed on Blackwell SKUs early this year. For analysts, this implies that the allocation of monolithic B200 (1,000 watts) and GB200 (1,200 watts) SKUs may be 'limited or non-existent,' potentially resulting in the company shipping only B300A (700 watts).
'We heard that NVDA will be confirming orders for MPWR over the next several quarters, but that NVDA has canceled half of MPWR's backlog and cut all unconfirmed orders,' explained the analyst. 'Renesas is expected to increase Hopper's allocation by 50% in Q1 or Q2 and potentially by around 15% in Q4 2024. We're not aware of any plans for IFX to qualify for Hopper. NVDA engineering seems to have lost confidence in MPWR and decided to concentrate on Renesas and IFX as two major suppliers.'
Analysts also pointed out that the monolithic solution to the Hopper issue is considered by some supply chain partners as a 'temporary measure at the time' in contrast to a true solution to the root cause.
'This poses significant downside risk to MPWR's Enterprise Data segment in 2025, as investor focus on MPWR's AI performance increases, bringing significant risks to the stock. It is currently overshadowing the company's strong results in other segments,' added the analyst.
Monolithic has not yet responded to the comment request from Seeking Alpha.
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