The profit warning of Mobileye, a manufacturer of chips for the automotive and autonomous driving, on 2024 revenues has sunk the stock as well as that of Intel which is the largest shareholder of the Israeli company. Mobileye, a supplier to Volkswagen and Porsche, explained that 2024 revenues will be below forecasts, due to a decline in demand. The company now expects sales of between $1.83 billion and $1.96 billion for 2024 while previous estimates were between $2.07 billion and $2.09 billion. The news sent all stocks across the chip sector lower. The group includes the Italian-French company StM, the German Infineon and the Dutch Asml which started 2024 with falling prices. Be Semiconductor also fell, already penalized by UBS’s downgrade, which revised its stock rating from “buy” to “neutral”.
Demand recovering in the second half of 2024
Demand for semiconductors, driven by artificial intelligence and the electric vehicle sector, is expected to start recovering in the second half of 2024. According to Gartner, 80% of companies globally will use generative AI in their operations by 2026, an exponential growth compared to 2023 compared to 2023. Among other things, the semiconductor market for artificial intelligence is expected to reach a turnover of 119.4 billion dollars in 2027, representing almost 20% of the global market of chips.
New financing in the USA to support the production of microprocessors in the country
Meanwhile in the USA the Biden government has announced that it will provide 162 million dollars to Microchip Technology to support the production of computer chips in the country. The incentives, the Commerce Department said, include $90 million for improve a factory in Colorado Springs, Colorado, and $72 million to expand a factory in Gresham, Oregon. The investments will triple domestic production and reduce dependence on foreign factories. This is the second funding announcement related to the Chips Act, the law designed to revive US semiconductor production. In December, the first $35 million in grants went to BAE Systems, which plans to expand a New Hampshire factory dedicated to producing chips for military aircraft, including the F-15 and F-35 jets.
New chip for augmented reality from Qualcomm
Qualcomm has launched the new generation of chips for virtual and augmented reality viewers, Snapdragon Xr2 Plus, a platform that will be the engine that will power the Samsung and Google viewers. The announcement of the new chip, which is the successor to the one present on Meta’s Quest 3 headset, was given as part of Qualcomm’s previews at the Consumer Electronic Show 2024, the Las Vegas fair dedicated to technological innovations.