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Datacenter chip shipments surged by 109%, rising nearly 20% after hours. Is the next AMD about to emerge?

Introduction:

我们曾在11月发布迈威尔科技（MRVL$Marvell Technology (MRVL.US)$）的深度报告《数据中心芯片巨头，迈威尔科技（MRVL$Marvell Technology (MRVL.US)$）千亿美金市值可期？——下一个英伟达或者AMD？》对迈威尔科技进行了全面深入的介绍与分析，对公司未来的业务进行了拆分与展望，在云计算与元宇宙时代，我们强烈看好迈威尔科技的表现，在完成一系列旨在增强产品线协同的业务收购布局以后，迈威尔科技形成了更为完整与协同作战的产品矩阵，伴随越来越的个人与设备加速到全球的互联网体系中来，数据仍将爆发式增长，未来围绕数据的存储、传输（联网与转发）迈威尔科技提供了一系列的产品，有望成为数据爆发逻辑下的卖水者，未来在云计算数据中心、车载、运营商等环节有望加速发展。

新季度业绩分析：单季度收入创历史新高，增速创十年新高，数据中心芯片爆发式增长

2022财年第三季度财务分析

12月2日盘后，基础设施半导体解决方案的领导者MarvellTechnology（纳斯达克股票代码：MRVL$Marvell Technology (MRVL.US)$）公布了2022财年第三季度的财务业绩，新财季，公司的收入包含新进收购的Innovium的业绩（PS：Marvell于2021年10月5日完成了对Innovium的收购）。

In Q3 of fiscal year 2022, Marvell's net income was $1.211 billion, exceeding the midpoint of the guidance provided by the company on August 26, 2021. The company's GAAP net loss for Q3 2022 was $63 million. The Non-GAAP net income for Q3 of fiscal year 2022 was $0.364 billion, and the operating cash flow for this quarter was $0.265 billion.

Looking at a longer period, Marvell Technology's revenue in this quarter is also outstanding, reaching a historical high of $1.211 billion, a year-on-year increase of 61.47%. The growth rate hit a new high in nearly a decade, with Non-GAAP net income of $0.364 billion in a single quarter, marking growth for ten consecutive quarters.

Marvell CEO Matt Murphy stated at the earnings call: "Marvell achieved a record revenue of $1.211 billion in the third fiscal quarter, up 13% sequentially and 61% year-on-year, surpassing the upper limit of previous expectations. Revenue in all five end markets the company is involved in has grown significantly."Led by the data center segment, which is the largest contributor to the company at 41% of total revenue, with a 15% sequential growth and a 109% year-on-year increase.""For the fourth quarter, we expect to achieve a 9% sequential revenue growth at the midpoint of guidance, with 5G expected to grow by 30% sequentially, and data center growth expected to continue at a double-digit rate."

After the earnings release, Marvell Technology$Marvell Technology (MRVL.US)$Stock price surged nearly 17% after hours, indicating the market's strong interest in the company. Following the company's upward revenue guidance, Marvell Technology's goal of reaching a market cap of one trillion dollars is steadily progressing.

Analysis of revenue sources in the third quarter of the 2022 fiscal year: Datacenter and automotive/industrial markets show promising performance.

The company's product solutions serve five major end markets, where the company's technology is crucial: (i) Datacenter, (ii) Operator infrastructure, (iii) Enterprise networks, (iv) Consumers, and (v) Automotive industry.

This quarter, the specific revenue and proportion based on the division of the terminal market are as follows:

The data center achieved revenue of 0.499 billion US dollars, a significant increase of 109% year-on-year, a 15% increase from the previous quarter, accounting for a 9% year-on-year increase in the overall revenue share, and a 1% increase from the previous quarter, becoming the largest source of revenue;

The carrier business achieved revenue of 0.215 billion, a 28% year-on-year increase, a 9% increase from the previous quarter, accounting for a 5% year-on-year decrease in the overall revenue share and remaining flat from the previous quarter;

The enterprise network achieved revenue of 0.247 billion, a significant increase of 56% year-on-year, maintaining the same proportion of overall revenue share year-on-year, and a 1% decrease from the previous quarter;

The consumer business achieved revenue of 0.182 billion, a 20% year-on-year increase, accounting for a 5% year-on-year decrease in the overall revenue share, and a 1% decrease from the previous quarter;

The automotive/industrial sector achieved revenue of 66.64 million, a significant increase of 114% year-on-year, also a 16% increase from the previous quarter, accounting for a 2% year-on-year increase in the overall revenue share and a 1% increase from the previous quarter;

From the above, we can clearly see that Marvell Technology is experiencing explosive growth in data center and automotive-related businesses, which is why we are most bullish on Marvell Technology's business in the future.

Financial outlook for the fourth quarter of the 2022 fiscal year

Net income is expected to be $1.32 billion (+/-3%). The revenue of $1.211 billion in the previous quarter continued to increase, with a year-on-year growth of 65.4%, and the growth rate continued to accelerate compared to the previous quarter, exceeding market expectations.

GAAP gross margin is expected to be between 47.9% and 49.8%.

Non-GAAP gross margin is expected to be approximately 65%.

GAAP operating expenses are expected to be $0.63 billion to $0.64 billion.

Non-GAAP operating expenses are expected to be $0.39 billion to $0.395 billion.

Introduction and Business Layout of Marvell Technology

1. Company Introduction

Marvell Technology, Inc. is one of the world's largest fabless semiconductor suppliers. The company's core technologies include microprocessor architecture and digital signal processing, driving multiple platforms including high-capacity storage solutions, mobile and wireless, networking, consumer, and green products. Its products include data storage devices, enterprise Ethernet data converters, wireless networks, personal area networks, Ethernet-based PC connections, control plane communication controllers, video image processing, and power management solutions. The company changed its name to Marvell Technology, Inc. on April 20, 2021.

2. The company's product line layout

Marvell provides a wide range of innovative data infrastructure semiconductor solutions, covering computing, networking, security, and storage. The company's products are essential for the transformation that operators, enterprises, data centers, and automotive data infrastructure segments must achieve to promote emerging services and applications in the digital economy. The company's solutions enable our customers and partners to move, store, process, and protect world data faster and more reliably than anyone else.

The company is a leading supplier of infrastructure semiconductor solutions, covering from the core of data centers to the network edge. We are a fabless semiconductor supplier of high-performance standard and semi-custom products, with core strengths in developing and expanding complex on-chip system architectures, integrating analog, mixed-signal, and digital signal processing functions. Leveraging leading intellectual property and deep system-level expertise, as well as highly innovative security firmware, the company's solutions are empowering the data economy and supporting data centers, operator infrastructures, enterprise networks, consumers, and automotive/industrial end markets.

Future Outlook: Cloud computing and metaverse era, data center and cloud-optimized chips have great potential

Overall, we are very bullish about the long-term opportunities in future digital center chips, cloud-optimized chips, in-vehicle chips, and other areas. Marvell Technology has made deep inroads in these key areas, as elaborated below:

(1) The semiconductor performance throughout the year has been astonishing, with the core support coming from the increasing demand for underlying chips brought about by the digitization of everything.

In previous articles, a detailed analysis of the continuous surge in the semiconductor market has also been conducted. The COVID-19 pandemic has accelerated the global digitalization process, leading to accelerated development trends in online education, video conferencing, e-commerce, digital advertising, cloud computing, smart electric vehicles, and other industries. As the digital foundation, the sharp increase in chip demand has led to a new round of explosive growth in companies related to the chip industry chain's performance.

From the returns from the beginning of the year to the present, the Philadelphia Semiconductor Index has performed very well. Among its constituents, Nvidia (NVDA) led the way with a return of 132% year-to-date, followed by semiconductor equipment leader Applied Materials (AMAT) with a 82.71% increase. FPGA chip company Lattice Semiconductor (LSCC), analog chip supplier Maxim Integrated, lithography leader ASML, Bruker Automation, chip fab K-tech Semiconductor, AMD, and others are among the top performers. The focus of this analysis is Marvell Technology (MRVL), ranked twelfth in terms of performance, with a 55% increase year-to-date. The choice of Marvell Technology is due to the strong belief in the future growth of data center chips, and the performance certainty of being a major supplier of data center chips looks very promising.

According to TrendForce's latest survey report, due to the persistent shortage of semiconductor capacity in the industry and the resulting rise in chip prices, the revenue of the top ten IC design companies (Fabless) reached $29.8 billion in Q2 2021, a 60.8% year-on-year growth. After completing the acquisition of Inphi, Marvell experienced a significant revenue growth, surpassing Xilinx and Realtek in rankings, rising from ninth place in Q1 2021 to seventh in Q2 2021.

(E) In the semiconductor sector, we continue to be optimistic about companies related to data center chips

From the revenues of some semiconductor companies in Taiwan as mentioned above, the general semiconductor sector including storage, LED chips, etc., has been in a downward trend over the past few months. Shipments of end products including touch screens, motherboards, PCs, batteries, etc., have also slowed to varying degrees. Therefore, some companies in the corresponding areas of the US stock market, such as Micron Technology (MU), Western Digital, have experienced significant declines, while the automotive chip and data center chip sectors have relatively better performance.

By tracking the monthly revenue data of ** Shineway Technologies (5274.TWO), we can effectively monitor the shipment situation of European and American servers, indirectly tracking the construction status of European and American cloud computing data centers. In recent months, Shineway's shipment data has been consistently positive, and the stock price has continued to reach new historical highs.

Phison Electronics, established in 2004, combines a group of outstanding talents with over ten years of experience in IC hardware and software design. It also observes new market trends and business opportunities, and is determined to jointly establish a Fabless IC design company. The corporate mission of Phison Electronics is to continuously provide innovative software and hardware solutions based on SOC architecture for remote control, management, and information security for personal computers and server computers. Phison Electronics has professional IC design experience and processes that facilitate rapid commercialization of designed ICs. Currently, it has main IC products such as AST1000, AST1100, AST2000, AST2050, and AST2100, mainly used in networking and remote display and control. It offers customers diverse and flexible product specifications, and has received large orders from many foreign computer server giants such as IBM, Dell, SunMicro... While becoming one of the top two suppliers of KVM network processor chips in the world. This business opportunity lies in enabling IT personnel to directly manage and maintain server computers at various operation points of the enterprise through regional networks or the Internet at any time and any location, with the aim of significantly reducing the total cost of ownership for enterprise server computer infrastructure investment. The key lies in the technological innovation of the 'server computer remote drawing and peripheral device control IC.'

From the above figure, it can be seen that since August, Phison's monthly revenue has been accelerating, with year-on-year growth rates of 49.53%, 47.75%, 88.61% in August, September, and October respectively, indicating a clear recovery in server shipments.

In the cloud computing data center field, our focus is bullish on AMD, Nvidia, and Marvell Technology, the three major chip giants, as well as the upstream EDA duopoly of Cadence Design Systems and Synopsys.

(Three) Acquisitions to build the company's long-term competitiveness

· Acquisition of Inphi

On April 20, 2021, the company completed the acquisition of Inphi Corporation. Inphi is a global leader in high-speed data movement through optical interconnect. Their product portfolio includes laser drivers, cross-resistance amplifiers, PAM (pulse amplitude modulation), coherent DSP (digital signal processor), differentiated silicon photonics, and optical PHY product portfolios for intra and interconnects within data centers, as well as interconnects for the carrier market.The merged company's position in carriers and datacenters continues to grow. Inphi's high-speed electro-optical platform complements Marvell's previous storage, networking, computing, and security product portfolio. The combination of Inphi's electro-optical product portfolio with the company's copper Ethernet PHY licensing rights is expected to create a leading high-speed data interconnection platform.

From the perspective of the acquisition's effect, Inphi's addition has significantly boosted Marvell Technology's revenue growth rate. Inphi's optoelectronic chips have brought a substantial increment to Marvell in the datacenter and carrier markets.

Marvell completes the acquisition of Innovium, expanding Marvell's silicon solutions portfolio for cloud data centers.

On October 5, 2021, the company announced the completion of its acquisition of Innovium, Inc. Innovium is a leading supplier of network solutions, with its primary focus on network switch chips for cloud and edge data centers. It is currently the only chip company capable of competing for Broadcom's market share.

The acquisition of Innovium and its complementary products further expands Marvell's leading position in the cloud space, enabling Marvell to immediately engage in the fastest-growing segment of the switch market through cloud-optimized solutions.

Marvell Technology's competitor Broadcom currently dominates the switch chip market, used to help cloud computing companies like Amazon and Microsoft establish large data centers. Following the successive acquisitions of Inphi and Innovium, Inphi's chips can link the switches with optical cables, enabling Marvell Technology to have superior switch chip products to compete with Broadcom and challenge its leading position in the industry.

The company's CEO, Matt Murphy, stated in an interview with foreign media that cloud computing suppliers are one of the world's largest chip buyers, and the company's long-term plan is to integrate the products of both Innovium and Inphi, thereby deepening relations with cloud computing suppliers.

After completing a series of acquisitions, Marvell Technology has established a complete chip platform—owning all the essential parts, this will play a significant synergistic role in the era of cloud computing and the Internet of Things.

(Four) Cloud-optimized chips are expected to become the company's fastest-growing source of revenue.

Recently, in the analyst day speech, the company mentioned significant growth opportunities in the cloud-optimized chip sector. Based on Marvell Technology's increasing market share, it is expected to surpass the market it can serve, while its revenue growth rate will increase to 15%-20%, ranking among the highest in the industry.

We believe that in the era of cloud computing, the chip demand for data centers will maintain a high growth rate in the medium to long term. Marvell Technology is continuously expanding the application terminal areas of its chips through constant layout adjustments. In 2024, the market opportunity facing the company exceeds 30 billion US dollars, with the long-term goal of occupying a 15-20% market share and corresponding revenue of 4.5-6 billion US dollars by 2023.

(Five) Automotive chips are expected to encounter golden development opportunities in the future.

Marvell provides a complete portfolio of automotive Ethernet products, including Ethernet PHY transceivers and switches supporting speeds from 100Mbps to 10Gbps, with enhanced security and safety features required for current and future in-vehicle networks.

Modern vehicles are becoming data centers on wheels. Advanced features such as collision detection, lane departure warnings, and autonomous driving require a large amount of security data processing, networking, and storage.

Marvell's automotive Ethernet PHY series solutions support standards like 10GBASE-T1, 5GBASE-T1, 2.5GBASE-T1, 1000BASE-T1, 100BASE-T1, 1000BASE-T, 100BASE-TX, and 10BASE-T. They are well-suited for a wide range of automotive applications, manufactured using standard digital CMOS processes, and include all active circuits required to implement physical layer functions for transmitting and receiving data on a single balanced twisted pair.

Automotive Ethernet PHY integrates media-dependent interface (MDI) termination resistors into the PHY, simplifying circuit board layout and reducing circuit board costs by reducing the number of external components. Additionally, they support integrated regulators to generate all required voltages, allowing the device to operate with a single 3.3V power supply.

Marvell's automotive Ethernet switch series products provide advanced features designed for today's in-vehicle networks. With advanced security such as trusted boot and deep packet inspection, as well as time-sensitive network functions, these switches are ideal for automotive applications such as advanced driver assistance systems, central gateways, body domain controllers, and in-vehicle entertainment systems.

In the field of automotive computing chips, Marvell has introduced a new ARM-based autonomous driving optimized chip, aiming to seize the future automatic driving computing chip market with a compound annual growth rate reaching 20%. The company expects this market to exceed $5.3 billion by 2028.

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