Daily: Micron, Qualcomm's blockbuster earnings push chip stocks
6.5 min read.
Highlights
Micron earnings. Micron posted a blockbuster earnings report that renewed investor enthusiasm in the AI boom and push up chip stocks across the board. The US memory chipmaker reported nearly 15x quarterly net income year-on-year. The company is expected to post even higher earnings for this current quarter as the demand for memory chips shows no signs of subsiding. Micron stock is up 15%.
Qualcomm earnings. Qualcomm also had very strong earnings and a strong forecast, pushing its stock up ~12% and helping to drive industry-wide bump in stock prices after steep declines in recent days. Most notably, Qualcomm is shifting from smartphone chips (the reason for lacklustre performance for much of this year) to data centre chips (the reason for a stock rally in the past 2 months). Qualcomm secured Meta as its first major customer and said it has two more large customers on the way. As reported yesterday, Qualcomm will also provide design services to Chinese tech giant ByteDance.
OpenAI-Broadcom’s first chip. OpenAI and Broadcom released their first custom chip after much anticipation since their partnership announcement late last year. The AI lab hopes to scale the chips to the tune of 10 gigawatts.
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1. Policy and Geopolitics
1.1
Korea Herald (06/24): Korea nears choice of chip hub outside Greater Seoul
South Korea is nearing an announcement on a new semiconductor production cluster outside Greater Seoul, which includes Incheon and Gyeonggi Province, as the government and the country’s two largest chipmakers move to expand capacity for the era of artificial intelligence.
Kim Yong-beom, President Lee Jae Myung’s chief policy adviser, said Wednesday that the government, Samsung Electronics and SK hynix had been engaged in “serious discussions” over a second semiconductor cluster, including its location and the power and water infrastructure needed to support it.
2. Economy, Finance, and Business
2.1
FT (06/25): Micron posts 15-fold profit surge as AI companies clamour for chips
Chip giant Micron has reported a nearly 15-fold surge in quarterly profits as companies rush to secure memory chips for data centres at the heart of the AI boom, sending shares in the $1.3tn group rallying sharply.
The US tech company said its net income jumped to $28.2bn in its fiscal quarter to May 28 from $1.9bn in the same period a year earlier, exceeding Wall Street forecasts by about $4bn as its profit margins widened.
The group said its revenues jumped almost 350 per cent to $41.5bn in the May quarter, while it forecast current quarter sales of about $50bn, far above analysts’ expectations in a Visible Alpha poll of $43.7bn.
2.2
FT (06/25): Qualcomm reveals Meta as first Big Tech customer for data centre chips
Qualcomm will supply its data centre processors to Meta as it seeks to establish itself as a major player in the AI data centre boom and cut into Nvidia’s share of the multibillion-dollar market.
The San Diego-based chip company, best known for its smartphone chips, on Wednesday said it had lined up two more Big Tech customers for its data centre chips.
Qualcomm upped its full-year 2029 non-handset revenue forecast to $40bn, roughly double its previous estimate. That figure includes a target of $15bn in revenue from its new data centre business.
The announcement is likely to please investors who were looking for signs of further momentum after it first entered the AI data centre market last year, striking an infrastructure deal with Saudi Arabia’s Humain.
2.3
Bloomberg (06/25): Micron and Qualcomm Lift Chipmakers Amid Rapid AI Growth
Shares of semiconductor stocks are soaring in extended trading on Wednesday, following a strong financial report from Micron Technology Inc. that underscored how artificial intelligence remains a major vector for growth.
Micron, the largest US maker of computer memory chips, jumped 15% after the market close when its results and forecast both exceeded expectations, reassuring investors about the state of the AI trade. The rally was the latest sign of the stock’s robust momentum; it has already soared about 270% this year, as of Wednesday’s close.
Qualcomm Inc. also rose more than 10% after the Micron report. At an investor day event hosted Wednesday, the company gave a number of positive comments about the growth it expects to see from AI. It said its expansion into chips for data centers will produce “billions” in revenue in the fiscal year that begins in October.
2.4
FT (06/24): SK Hynix bets on AI demand with bumper $29bn US listing
Chipmaker SK Hynix is to raise Won 45.5tn ($29bn) in a US listing, taking advantage of a surge in its share price sparked by its central role in the global AI boom.
The South Korean group said in a regulatory filing on Wednesday it planned to list American depositary receipts on the Nasdaq exchange next month.
2.5
WSJ (06/24): Qualcomm to Acquire AI Software Firm Modular in $3.9 Billion Stock Deal
Qualcomm agreed to acquire the AI software company Modular for about $3.9 billion, in a bid to make artificial intelligence faster and cheaper for its customers.
The semiconductor company said Wednesday that, as consideration for the acquisition, Qualcomm expects to issue up to 19.2 million shares of its common stock to equity owners of Modular. That values the deal at around $3.92 billion, based on Qualcomm’s closing price of $204.13 on Tuesday.
3. Technology
3.1
NYT (06/24): OpenAI and Broadcom Unveil Custom A.I. Chip Design
[OpenAI and Broadcom] unveiled the design of their first chip, called Jalapeño, reaching a milestone in OpenAI’s efforts to install the technology in data centers to power A.I. across the globe.
OpenAI has said it plans to eventually use enough of these custom chips to consume 10 gigawatts of electricity, an amount that could power millions of households.
In addition to the company’s collaboration with Broadcom, OpenAI has signed deals with the chip makers Nvidia and AMD and the start-up Cerebras.
3.2
Bloomberg (06/24): Chip Startup Backed by Ex-ASML CEO Seeks to Raise €200 Million
Euclyd, a Dutch chip startup backed by former ASML Holding NV Chief Executive Officer Peter Wennink, is seeking to raise about €200 million ($229 million) in Series A financing.
The company has received several term sheets from potential investors, a person familiar with the matter said, asking not to be identified because the information isn’t public. The fundraising is not finalized and the amount could still change, the person added.
The Eindhoven startup was founded in 2024 by a team including former ASML executive Bernardo Kastrup. Euclyd seeks to build chips for artificial intelligence data centers that are as much as 100 times more energy-efficient than Nvidia Corp.’s graphics processing units. The company is developing a chip system that cuts processing times for requests to reduce the amount of power that’s needed in traditional GPU architecture. It joins a wave of startups designing AI processors, including Fractile, which raised $220 million last month.
3.3
Axios (06/24): Microsoft points to lower water use in AI era
Microsoft is seeking to make the case that its AI-fueled data center expansion does not come with soaring water use.
Why it matters: Combined with recent water announcements from Google, Amazon and Nvidia, Microsoft’s update Wednesday shows how the companies at the heart of the AI boom are racing to respond to growing concerns about the buildout’s environmental footprint.
Driving the news: Microsoft said its newest AI-focused data center designs — first unveiled in 2024 — do not consume water for cooling during normal operations.
3.4
SCMP (06/25): China’s JCET to build new plant in Shanghai to expand advanced chip packaging
Chinese chip-packaging and testing giant Jiangsu Changjiang Electronics Technology (JCET) says it will invest 7.8 billion yuan (US$1.15 billion) to build a new plant, as demand for home-grown chips continues to surge amid the rapid development of artificial intelligence.
A controlled subsidiary with a registered capital of 4 billion yuan would be set up to construct an advanced packaging and testing factory in the Lin-gang Special Area in Shanghai, the company said on Wednesday.
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