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IC Design Houses Surge on Smartphone Stockpiling, Generative AI Boom

The third quarter of 2023 proved to be a golden age for chipmakers, with global IC design houses experiencing a 17.8% surge in revenue to reach a staggering US$44.7 billion, according to market research firm TrendForce. This remarkable growth is fueled by stockpiling for smartphones and laptops, combined with a rapid acceleration in the shipment of generative AI chips and components. 

Fueling the Fire: 

  • Smartphones and Laptops Lead the Charge: Pre-emptive stocking of components in the smartphone and laptop markets played a pivotal role in the surge. Manufacturers, wary of potential supply chain disruptions, built up inventories, driving demand for chips across the board. 
  • AI Takes Center Stage: The explosive growth of generative AI added another potent fuel to the fire. Chips specifically designed for these applications, including Natural Language Processing (NLP) and Large Language Models (LLMs), saw rapid adoption, propelling companies like NVIDIA to new heights.

Capitalizing on the AI wave, NVIDIA secured the top spot, with its revenue rocketing 45.7% to US$16.5 billion with their data center business, a major beneficiary of the AI boom, accounting for nearly 80% of this extraordinary growth. 

Further down the ladder, a shakeup occurred as analog IC supplier Cirrus Logic dethroned US PMIC manufacturer MPS to claim the coveted tenth position, driven by the strong demand for their audio and haptic technology in the smartphone stockpiling frenzy. 

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TrendForce predicts DRAM and eMMC/UFS prices for mobile devices to skyrocket by 18-23% in Q1 2024 as smartphone brands continue their stockpiling endeavors. This price hike could potentially impact consumer spending and put a damper on the sustained growth the industry has been witnessing. 

Q3 2023 marked a stellar performance for IC design houses, fueled by the rise of AI and stockpiling for smartphones and laptops. However, potential price increases in the mobile memory market add a layer of uncertainty to the industry’s future trajectory. Whether the current momentum can be maintained in the face of these headwinds remains to be seen. 

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