With the increasing demand for AI, Marvell's market capitalization surpasses Intel, changing the landscape of the semiconductor industry.

Marvell achieved significantly better-than-expected performance in the third quarter financial results for fiscal year 2024. Revenue reached 1.52 billion dollars, a 7% increase compared to the same period last year, largely driven by strong demand for AI-related products. Particularly noteworthy is the improvement in the non-GAAP gross profit margin, which clearly demonstrates the company's product competitiveness and pricing power.

In response to this performance, the financial estimates for the fourth quarter, which were announced, have also become extremely bullish. The revenue is expected to reach $1.8 billion, with the noteworthy point being the forecast that the non-GAAP-based gross profit margin will reach 60%. This number suggests that the company's products have strong competitive advantages in the market. The high gross profit margin could serve as a source of reinvestment in research and development and shareholder returns, potentially leading to a sustainable growth cycle.
Against the backdrop of this strong performance and bullish outlook, Marvell's stock price hit an all-time high, briefly reaching a market capitalization of $102 billion. Subsequently, despite some adjustments, it has been maintaining a high level of $98.22 billion. This surpasses Intel's market capitalization of $90.23 billion, symbolizing a shift in power dynamics in the semiconductor industry.

Of particular note is that this growth is supported by strong sales of AI infrastructure products. With the increasing demand in data centers, investments in high-performance networking products and data processing solutions have expanded, and Marvell has established a strong position in this growing market. The company's product portfolio is appropriately addressing the requirements of modern data centers, such as high-speed data transfer, efficient data processing, and low-latency communications, leading to sustained performance improvement.

The rise of Marvell and the struggles of Intel vividly reflect a paradigm shift in the semiconductor industry. Established in the mid-1990s, Marvell has focused on developing semiconductor solutions tailored for data centers and cloud operators. The company's product portfolio includes essential products for modern AI infrastructure such as Data Processing Units (DPUs), storage accelerators, Ethernet components, data center switches, DCI optical modules, and transimpedance amplifiers.
Notably, Marvell also used to handle chips for consumer devices before 2017, supplying components like the Wi-Fi chip for the first-generation iPhone and the Armada 1500 series SoC for the first and second generations of Chromecast. However, the company made a strategic decision to sell this division to Synaptics. By focusing its management resources on semiconductor solutions for data infrastructure, it successfully captured the demands of the AI era.

On the other hand, Intel, which has been a leader in the semiconductor industry since the 1960s, is facing a serious management crisis. The company's stock price has plummeted by nearly 70% from its all-time high, leading to Pat Gelsinger stepping down as Chief Executive Officer (CEO) due to poor performance. Furthermore, as a cost-saving measure, a workforce reduction equivalent to 15% of employees was implemented. An emblematic event was its exclusion from the Dow Jones Industrial Average after many years, yielding its position to Nvidia, benefiting from AI demand.

The biggest factor that determined these contrasting outcomes lies in the differences in the two companies' business models. Intel has long achieved success with a vertically integrated business model focused on processors for PCs. However, as the demand for dedicated chips optimized for AI workloads rapidly rises, this traditional model has become a hindrance. In contrast, Marvell flexibly optimizes its product lineup in line with the evolution of data centers, showcasing strength especially in the areas of networking and data processing.
Furthermore, Marvell, as a fabless (no manufacturing facilities) company, achieves efficient product development and manufacturing by utilizing advanced manufacturing processes such as Taiwan's TSMC foundries (semiconductor contract manufacturers). This agile business model enables rapid responses to rapidly changing market needs, ultimately leading to the enhancement of corporate value.

The semiconductor industry is currently at a historical turning point. While Intel, which has dominated the market with x86 architecture for many years, has been unable to respond promptly to the demands of the AI era, Marvell has accurately read the market changes and optimized its product portfolio.
However, it would be premature to see this turnaround simply as a victory or defeat. Marvell's success is the result of a focused strategy on specific market segments, and considering Intel's comprehensive technological capabilities and manufacturing capacity, both companies should be evaluated on different axes. Nevertheless, this event is likely to be long remembered as a significant turning point that symbolizes a paradigm shift in the semiconductor industry.

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