NVIDIA Drives Semiconductor Market to New Records, But Market Is Weak

The sector of semiconductors set a new all-time record in the second quarter of 2024, with total revenue reaching $162.1 billion, a 6.7% increase from the previous quarter. This result, which surpasses the previous record set in the fourth quarter of 2021, was largely driven by NVIDIAthe undisputed leader in the sector, whose quarterly revenues are now $18 billion higher than those of 2021.

However, Omdia’s analysis reveals that this growth is not shared by all companies in the sector. Despite total revenues increasing by $33 billion compared to the previous year, over 50% of the companies monitored reported a decline in revenues. This indicates a clear concentration of the market, with growth affecting a small number of companies. NVIDIA’s dominant position is evident: without its contribution, the market would be far from reaching a new record. Excluding NVIDIA’s revenues, the record would remain that of the fourth quarter of 2021, with total revenues of $155.8 billion, while revenues for the second quarter of 2024 would stand at $138.2 billion.

NVIDIA’s growth is primarily driven by demand for AI solutions, but other segments of the semiconductor market are also benefiting from this trend. Memory companies, in particular, are benefiting from demand for high-bandwidth memory (HBM) chips used to power AI processors. Additionally, the memory market has seen an improved balance between supply and demand, with quarterly revenue now exceeding $40 billion.

Omdia’s analysis also highlights a growing concentration of the market in the hands of the largest companies. The top ten companies by revenue now account for 64% of the total market, the highest share ever recorded and seven percentage points higher than the five-year average of 57%.

NVIDIA continues to expand its market share, now accounting for 14.8% of the semiconductor market by revenue. Intel, historically ranked first or second, is now ranked third for the third consecutive quarter, with a market share of 7.5%, the lowest it has ever been since Omdia began tracking the market in 2002. It is no coincidence, then, that Intel has separated its chipmaking from the rest of the company.