Global Top 10 IC Designers' 2019 Revenues Drop by 4.1% YoY, as Industry Growth to Face Challenges from COVID-19 Pandemic in 2020, Says TrendForce

Under the combined influence of the U.S. Entity List and the COVID-19 pandemic, the IC design industry is unlikely to return to growth in 2020.

March 17, 2020 -- The latest investigations from TrendForce finds that the top three IC design companies in 2019, Broadcom, Qualcomm, and NVIDIA, all exhibited decreased YoY revenues, significantly impacting global IC design revenue. Whether the industry can return to a state of growth will depend on whether the U.S. Department of Commerce expands its export restrictions and whether the COVID-19 pandemic can be sufficiently contained.

According to TrendForce Senior Analyst C. Y. Yao, 2019 industry leader Broadcom was affected by the U.S. Entity List policy and saw a 7% revenue decrease YoY. Second-place Qualcomm faced fierce competition from companies such as Huawei, MediaTek, and Unisoc. Although Huawei was added to the Entity List in May, 2019, the company felt only limited impact in terms of overall 2019 revenue, while its smartphones equipped with Kirin SoCs saw strong shipment, which constricted the performance of other smartphone brands. As Chinese brands began cutting their dependence on U.S. technology, MediaTek and Unisoc gained increased chip adoption in the entry-level and mid-range smartphone sectors, lowering Qualcomm’s shipment of smartphone chips; Qualcomm registered an 11% decrease YoY in terms of revenue.

Third-place NVIDIA faced an excessive stock of gaming graphics cards in the first three quarters of 2019, in turn resulting in YoY decreases in revenue for each of those quarters. As NVIDIA’s inventory levels returned to normal in 4Q19, its 4Q19 revenue returned to growth as well. However, NVIDIA’s overall 2019 revenue still decreased by 9% YoY.

In terms of U.S.-based IC designers, only AMD and Xilinx maintained revenue growths. Owing mostly to Intel’s inability to effectively address its supply shortage, AMD notched excellent performances in terms of 3Q19 and 4Q19 revenue, which resulted in a consistent growth in overall 2019 revenue. Xilinx, as the other U.S.-based company undergoing revenue growth, excelled in 5G, industrial automation, and automotive applications. Although the Entity List’s implementation began affecting Xilinx in 4Q19, the company was able to grow its revenue by 12% YoY.

Wired networking and storage controller manufacturer Marvell was similarly disrupted by the China-U.S. trade war, while the company sold its Wi-Fi business unit to NXP in 2019. Marvell’s revenue fell by 4.1% YoY, landing it in the seventh place on the top 10 list.

The three Taiwanese IC design companies showed strong performances in 2019. In particular, MediaTek began providing high-end, mid-range, and entry-level mobile chipsets using 12nm technology in 2018. Its 12nm solutions gradually exhibited a cost-performance advantage in 2019 in the smartphone market, where models such as Oppo’s A-series and Xiaomi’s Redmi lineup, among many other phones, adopted MediaTek chipsets. In contrast, Novatek focused on developing TDDI solutions, which saw a healthy growth in demand from Chinese smartphone brands, with Huawei and Xiaomi serving as Novatek’s main TDDI clients. Lastly, Realtek dominated in the TWS chip market. As Wi-Fi 6 applications saw increased ramp-up, Realtek registered a 30% revenue increase YoY, the highest percentage growth among the top 10 IC designers.

Regarding the IC design industry’s outlook in 2020, despite the seemingly improved trade relations between China and the U.S., the latter government has not put an end to its Entity List policy. In addition, the COVID-19 pandemic is now a global threat, which will certainly affect the public’s purchasing demand for consumer electronics. Should the Entity List policy continue to exert its influence on the industry, market leader Broadcom is expected to struggle in the short run as it attempts to make a recovery in terms of semiconductor revenue. On the other hand, although Qualcomm is projected to once again be a part of Apple’s supply chain in 2020, the pandemic has not been effectively contained, in turn affecting the sales performance of iPhones and by extension Qualcomm’s chip revenue. As well, NVIDIA has revised down its fiscal 1Q21 revenue outlook in light of the pandemic’s impact. Given that the pandemic has already exerted its influence over the IC design industry in 1H20, the overall industry is unlikely to recover in 2020.