Nvidia, a company specializing in graphic processing unit (GPU), USA(244.51 -1.08%)has surpassed Taiwan TSMC, the world’s largest foundry (semiconductor contract manufacturing) company, to become the world’s largest semiconductor company by market capitalization. Nvidia, which is expanding its business area with artificial intelligence (AI) semiconductors, is believed to have been recognized for its future value.
TSMC has come down from the No. 1 position by market cap as more competition and a decrease in orders from smartphone makers due to global parts shortages have been highlighted rather than the structural growth of the foundry market. In the industry, the prospect that Nvidia’s stock price will continue to rise for a long period of time is dominant, and that it will maintain the top position in market cap.
Shares soared 18% in the past month
According to the financial investment industry on the 28th, Nvidia’s market cap as of the closing price on the 26th was $617.92 billion, up about 6.7% from the previous day ($579.15 billion). TSMC’s market capitalization today stood at $592.14 billion. TSMC gave up the world’s No. 1 position in semiconductor market capitalization to Nvidia for the first time in about a year and three months since July last year.
On the 27th (local time), Nvidia’s market cap stood at $611.1 billion and TSMC’s market cap stood at $589.86 billion, maintaining its ranking. It was followed by Samsung Electronics ($404.39 billion), ASML ($331.07 billion), Broadcom ($215.3 billion) and Intel ($194.76 billion). Despite the recent slump in the overall share price of the semiconductor industry, Nvidia’s share price is showing a strong upward trend. It rose 10.6% in the past five days and 18.1% in one month.
Beneficiaries of Facebook’s AI Investment Expansion
It is analyzed that the growth potential of the AI semiconductor market, which Nvidia is actively investing in, has been highlighted. According to market researcher Gartner, the global AI semiconductor market is expected to surge from $18.1 billion this year to $34.3 billion in 2023.
Nvidia dominates the global AI semiconductor market with a product called ‘GPGPU’. GPGPU is Nvidia’s upgraded GPU, which is good at simple calculations and is suitable for AI deep learning (learning data repeatedly).
In this situation, it is analyzed that the announcement that Facebook, which declared ‘transition to a metaverse company’, at the 3Q earnings briefing held on the 25th, “will invest up to $34 billion in AI next year,” played a catalyst in the rise of Nvidia’s stock price. . Global investment banks are citing Nvidia as a beneficiary of Facebook’s AI investment expansion.
The growth potential of new businesses is also highly evaluated. Nvidia has launched a metaverse service called ‘Omniverse’. It is an online space where designers create three-dimensional (3D) images or videos together. It can also be used for architectural design. Famous 3D production tool makers such as Adobe and Blender also joined. To use Omnibus, you need a subscription, which requires an Nvidia RTX graphics card.
‘GeForce Now’, a cloud gaming service, is also gaining popularity worldwide. Gamers pay about $10 a month to enjoy the highest-spec graphics games run on Nvidia’s top-end servers on their smartphones, etc.
Expectations for the third quarter of fiscal 2022 (August to October), which are scheduled to be announced on the 17th of next month, are also growing. The average earnings per share (EPS) for the third quarter, estimated by brokerages, was $1.1. This is an increase of 50.7% and 5.8%, respectively, from $0.73 in the third quarter of last year and $1.04 in the previous quarter.
ARM argument ‘unclear’
There are no risk factors. A representative example is the movement of non-semiconductor companies such as Apple and Tesla to develop their own chips. Apple announced that the recently unveiled laptop ‘Macbook Pro’ will be equipped with ‘M1 Pro’ and ‘M1 Max’, which are self-developed integrated chipsets (SoC). Apple, which developed its own GPU, Nvidia’s flagship product, emphasized that “performance is superior to other products.” Tesla plans to unveil the AI semiconductor ‘D1’ and apply it to the supercomputer ‘Dojo’ scheduled to be operated next year.
The lack of pace in the UK semiconductor company ARM’s mergers and acquisitions (M&A) is also considered a risk factor. Last year, Nvidia decided to acquire ARM for $40 billion, but competition authorities in each country that decide whether to approve the M&A are negative. On the same day, the European Union (EU) Competition Commission said it would investigate the mergers and acquisitions of the two companies for four months. did.
If the competition authorities do not approve the M&A, Nvidia must pay a termination fee to ARM and abandon the acquisition agreement.
Silicon Valley = Correspondent Hwang Jung-soo hjs@hankyung.com
