Broadcom Limited, Qualcomm and NVIDIA respectively took first, second and third place in TrendForce’s latest ranking of the global top 10 fabless IC design houses for the second quarter of 2017. With MediaTek and Marvell as exceptions, the eight other design houses in the top 10 ranking posted year-on-year revenue growth.
With regard to the ranking, TrendForce analyst CY Yao pointed out the following: “Generally, the top 10 design houses did well revenue-wise in the second quarter. Broadcom’s growth momentum is built on its ability to offer competitive and complete solutions for network infrastructure and data center applications. At the same time, Broadcom is one of the major suppliers of automotive Ethernet chips. Because of its successes in these markets, Broadcom remained the revenue leader in IC design industry in the second quarter.”
In terms of year-on-year growth, NVIDIA surged ahead of the other competitors in the ranking for the second quarter, registering an impressive rate of 56.7%. Although NVIDIA did not perform particularly well in the gaming market during this three-month period, the company continues to lead in revenue growth in the data center and professional visualization markets.
MediaTek, on the other hand, is experiencing issues in developing a successful product strategy. This challenge in turn has affected the company’s ability to compete in the smartphone market and caused its overall revenue performance to fall below expectations.
At the current stage of the competition between MediaTek and Qualcomm in the smartphone market, MediaTek has recently released P23, a highly cost competitive mobile SoC that has a pricing advantage in the high-end to mid-range market segments. However, whether P23 can help to turn around the third-quarter revenue performance for MediaTek remains to be seen. Qualcomm this year has also launched several Snapdragon chipsets (i.e. 660, 630 and 450). If these products are widely adopted by smartphone clients, then Qualcomm can expect a significant revenue boost for the third quarter.
Qualcomm’s mobile SoC portfolio is more complete compared with MediaTek’s. Qualcomm’s Snapdragon 835 as a top-tier mobile SoC has been well received by the market since its release. Furthermore, Qualcomm has also filled the gaps along the high-end to mid-range segments with new offerings. For MediaTek, raising the gross margins for mobile products, keeping revenue up and retaining market share will be very challenging in the near future.
MediaTek’s P23 currently targets the high-end to mid-range segments of the smartphone market and has an edge in pricing. Nonetheless, growth in the smartphone market is already quite limited. Furthermore, the rival Qualcomm has a portfolio that covers all market segments. In the low-end market segment, Chinese IC design houses such as Spreadtrum are now extremely active and have become serious contenders. To retain its market share for lower-end mobile SoCs, MediaTek may have to lower its prices to a point where its gross margins and revenue performance are adversely affected.
Yao expects most of the top 10 IC design houses to register consecutive year-on-year revenue growth for this third quarter. “Demand is still quite strong in the major vertical application markets, including network infrastructure, data centers and automotive electronics,” said Yao. “Together, they will keep driving the industry’s revenue.”
As for the ranking, the third quarter will unlikely bring significant changes. IC companies that focus on smartphone chipsets or display drivers will need to work harder for achieve revenue gains because their end markets are seeing limited growth. Broadcom, NVIDIA, Xilinx and other companies that benefit from the steady expansions of certain vertical markets (e.g. network infrastructure), will continue to perform well revenue-wise. In sum, the third-quarter revenue ranking will remain generally the same because the top 10 IC design houses do not overlap on many applications.