Nvidia’s automotive division sells systems-on-a-chip for assisted driving. CEO Jensen Huang calls it the company’s “next billion-dollar business.”
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Beijing – US Chipmaker Nvidia Major revenue lines (other than autos) beat analysts’ expectations by a wide margin this week as China’s demand for electric vehicles slows.
The automotive sector mainly sells chip systems for assisted driving. Nvidia CEO Jensen Huang touted it last year as the company’s “next billion-dollar business.”
But growth in the sector has slowed this year. Huang did not repeat such predictions on the latest earnings call.
Auto revenue fell 15% from the previous quarter in the three months ended July 30, the first consecutive decline in more than a year.
Segment revenue of $253 million was also well below the $309.3 million forecast in a FactSet analyst survey.
“The quarter-on-quarter decline mainly reflects lower overall auto demand, especially in China,” Nvidia CFO Colette Kress said: in a statement on quarterly results.
Demand for self-driving systems helped auto revenue rise 15 percent from a year earlier, she said.
While still a small part of the chipmaker’s business, automotive revenue has grown rapidly from just over $100 million in the quarter two years ago.
China is the world’s largest auto market. Over the past few years, the country has become a global driver of electric vehicle development.
Local EV manufacturers such as BYD Xpeng is creating stiff competition for traditional automakers, partly by exaggerating technical features.
Brady Wang, associate director at Counterpoint Research, said Chinese original equipment manufacturers are a major market for Nvidia.
He said the quarter-on-quarter decline in auto revenue could be due to excess inventory among Chinese manufacturers and the result of lowering their forecasts for high-end car sales for the next two quarters.
Xpeng Motors exec joins Nvidia
NiohCompanies that sell premium electric vehicles are scheduled to report quarterly results on Tuesday. Earlier this month, Xpeng The second-quarter loss was bigger than expected.
Xpeng Motors is one of a handful of local EV companies offering driver assistance software in some Chinese cities. Tesla’s “Full Self-Driving” technology for navigating city streets has yet to fully spread in China.
On Thursday, Wu Xinzhou, the former head of autonomous driving at Xpeng Motors, said he would start his new job at Nvidia on Friday. That’s Wu’s statement on social media, which included retweeting photos of him with Xpeng Motors CEO He Xiaopeng and Nvidia Huang.
Nvidia is building an auto tech business. A self-driving car test is seen at the company’s auto garage in Santa Clara, California, on June 5, 2023.
Bloomberg | Bloomberg | Getty Images
Counterpoint’s Wang pointed out that Nvidia’s products are concentrated in the high-end automotive segment. “NVIDIA still faces competition from other players in the mid-range market, such as Horizon Robotics, Mobileye and some startups,” he said.
Other automotive chip companies have also seen sequential revenue declines in this segment.
Analog Devices Auto revenue for the three months ended July 29, reported Wednesday, was $747.6 million, down 5% from the previous quarter.
“We think (Analog Devices) is likely to be a leading indicator of the peak in the automotive chip cycle,” David Wong, technology strategy research analyst at Nomura, said in a note on Thursday. moving eye‘sand QualcommAutomotive chip revenue also declined month-on-month.
Opportunity worth over $10 billion
Nvidia has only recently begun to venture into the automotive space.
In its annual report in late February 2022, the company claimed $11 billion worth of automotive projects over the next six years.
A year later, Nvidia said in its annual report that its automotive project pipeline for the next six years is now worth $14 billion.
But in May, Nvidia said that quarter-over-quarter automotive revenue rose “as some new energy vehicle customers in China are adjusting production plans to reflect lower-than-expected demand growth.”
“This dynamic is expected to continue through the remainder of the year,” the company said.
According to statistics from the China Passenger Car Association, in July, the retail sales of new energy passenger vehicles were 641,000, a month-on-month decrease of 3.6%. Sales in the first seven months of the year were up about 36% from the same period last year, the company said.
Penetration of new energy vehicles, including hybrids and battery-powered vehicles, accounted for about a third of new passenger car sales in China this year, according to industry association data, a slowdown in the fast-growing segment.
Longer term, automakers still plan to buy parts Assisted driving function.
Hesai, The company, which makes light detection and ranging (LiDAR) devices commonly used in driver assistance systems, reported this month second-quarter revenue of 440.3 million yuan ($60.7 million), beating the company’s previous forecast.
The company shipped about 60,000 LiDAR units for driver assistance last year, and surpassed that figure in the first half of this year. Chief executive David Li expects the number of units to more than double this year.
The company will work with six OEMs this year and plans to work with 11 OEMs next year, he said.
“It’s not because of the hardware itself.”
“It’s an integrated experience that OEMs provide to customers as an ADAS feature,” he said, referring to advanced driver assistance systems.
Hesai further announced this month Collaboration of its products with Nvidia Autonomous driving system and simulation platform.