Nvidia Thrives in Record Chip Market Growth

In the ever-evolving semiconductor industry, market dynamics continue to shift, with Nvidia emerging as a dominant force. According to Omdia, Nvidia alone contributed a staggering US$18 billion in revenue in the second quarter of 2024, showcasing its significant market presence. While Nvidia's performance soared, many other companies in the sector struggled to maintain sales or experienced a decline during the same period.

During 2Q24, Nvidia captured 14.8 percent of the total chip revenue, a remarkable feat that underscored its position as a frontrunner in the market. In comparison, Intel Corp, a longstanding player in the semiconductor space, accounted for 7.5 percent of the chip revenue, securing the third position behind Samsung, a major memory maker. This data highlights the substantial lead that Nvidia has established over its competitors.

Despite the overall semiconductor market's revenue growth in 2Q24 compared to the previous year, Omdia reported that more than half of the companies tracked experienced a decline in semiconductor revenue year-over-year. In a detailed analysis of 125 companies monitored during the record quarters of 4Q21 and 2Q24, Omdia found that over 70 percent of them witnessed a drop in semiconductor revenue in the second quarter of 2024 compared to the preceding quarter.

Nvidia's exceptional growth trajectory can be attributed to the surging demand for artificial intelligence (AI) technologies, with a select few companies, particularly in the memory sector, reaping the benefits. The market for high-bandwidth memory (HBM) chips, crucial for supporting AI processors, has experienced a surge in demand, contributing to the overall growth in the memory market. After a challenging period in 2023, the semiconductor market has rebounded, with quarterly revenue surpassing $40 billion.

Cliff Leimbach, a principal analyst at Omdia, noted that the semiconductor market is witnessing a consolidation trend, with fewer market leaders capturing a larger share of sales. In 2Q24, the top ten companies in terms of revenue collectively accounted for 64 percent of the total market, marking a significant increase from the long-term average of 57 percent. This concentration of market power among a select group of companies is reshaping the competitive landscape of the semiconductor industry.