Bitcoin had a terrible last year when the top coin slipped to sub USD 3000 levels from the peaks of USD 20000, impacting the miners and chip makers the most. The impact of this fall is clearly seen on the financial numbers of most chipmakers as the struggle to find ground.
Nvidia blinks again as it Cuts Q4 Revenue Forecast by $500 Million
After being bashed for investors for past two quarters, The Chief Executive Officer (CEO) of Nvidia took the stage with another set of bad news. Sending out a letter to the investors, the top boss at Nvidia warned investors that its last financial quarter was another difficult period for the company.
As a result, the firm has lowered its revenue guidance for the fourth quarter of the 2019 fiscal year down to $2.2 billion, plus or minus two percent. While people were aware of the slowdown what came as a surprise was that the revised revenue guidance is $500 million lower than the previous revenue forecast for the fourth quarter, which was $2.7 billion. Needless to say, the letter didn’t go well with the investors and Following the announcement, shares of Nvidia plunged as much as 17 percent on Monday
Nvidia shares drop 13% in early trading after cutting Q4 revenue guidance. CEO Jensen Huang cited an "extraordinary, unusually turbulent, and disappointing quarter.” https://t.co/DB0sGbQgAf pic.twitter.com/Va2VuYLr0g
— Bloomberg (@business) January 28, 2019
Asian Chip manufacturers also bleed
While the Western chip makers are seeing calamities of the crypto plunge, the situation in the east is not much different. In Taiwan, Bitmain’s chip manufacturer United Microelectronics Corporation saw a roughly 10% decrease in revenue in the fourth quarter of 2018. The company too attributed some of its losses to the slowdown in demand for the cryptocurrency.
The Co-president of the company Jason Wang was quoted as saying:
“ Looking into the first quarter of 2019, we anticipate further deceleration in customers’ wafer demand, due to a softer than expected outlook in entry-level and mid-end smartphones as well as falling cryptocurrency valuations. Although UMC’s ongoing transformation will need time to reach its full synergy and potential, our progress so far has enabled the company to better endure these current headwinds.”
AMD outshines but predicts a significant decline in GPU Sales
Nvidia’s competitor on wall street, the American semiconductor chip maker Advanced Micro Devices, more commonly known as AMD brought out its quarterly numbers which showed that the company had “highest profitability in [seven] years”. While the numbers for this quarter were amazing, the crypto impact is expected to be seen in the coming quarter where the company is expecting a revenue drop due to the plunge in cryptocurrency mining, a major market for the company’s graphics cards. The quarterly statement release clearly mentioned the crypto impact as it clearly said
“The sequential decrease is expected to be primarily driven by continued softness in the graphics channel and seasonality across the business. The year-over-year decrease is expected to be primarily driven by lower graphics sales due to excess channel inventory, the absence of blockchain-related GPU revenue and lower memory sales.”
One of the major reason AMD survived this bitter period of the crypto plunge was due to its foresightedness as AMD’s CEO Lisa Su predicted a fall in the GPU market as early as October 2017 when the cryptocurrency market was showing tremendous growth projection.
Well, things look really meek for the crypto chipmakers for now and the outlook spelled out by each of these companies next two quarters also looks shaky. Now everything seems to be on the Bitcoin prices to revive their fortune in 2019
Will Chipmakers find their magic back in 2019? Do let us know your views on the same.
Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.