Marvell Technology announced first-quarter sales forecasts in line with Wall Street expectations on Wednesday, but its shares fell by nearly 16% after the close, as investors were disappointed by lower-than-expected growth in artificial intelligence.
Growing demand for AI chips, coupled with their scarcity, has driven up the price of Nvidia's processors. Faced with these soaring costs, tech giants such as Microsoft, Meta and Amazon are developing their own AI chips to reduce their dependence on Nvidia.
This strategic shift has benefited other semiconductor manufacturers, including Marvell and Broadcom.
"Investors were clearly expecting more ambitious results and outlook," commented Kinngai Chan, analyst at Summit Insights Group.
Marvell's data center segment reported a 78% year-on-year increase in fourth-quarter sales to $1.37 billion, driven by sustained demand for custom AI chips designed to optimize enterprise workloads.
This segment now accounts for around 75% of the company's overall sales over the period.
Marvell expects first-quarter sales of $1.88 billion, in line with the average analyst forecast, estimated at $1.87 billion according to LSEG data.
However, the company also recorded a decline in revenues in its enterprise networks and telecom infrastructure divisions, as customers in these sectors cut spending to clear existing inventory.
Sales in the enterprise networks segment fell by 35% year-on-year to $171.4 million, while those in telecom infrastructures plunged by 38% to $105.8 million.
Marvell Technology Group Ltd specializes in designing and marketing integrated communications and storage circuits intended for manufacturers of high-speed network equipment, hard disks, and consumer electronics. Net sales break down by area of application as follows:
- data centers (72.2%): artificial intelligence systems, data storage systems, Ethernet switches, servers, interconnection systems, etc.;
- enterprise networks (10.9%): routers, Ethernet switches, wireless access points, network equipment, workstations, etc. for campuses, small and medium-sized enterprises;
- telecom network infrastructures (5.9%): access multiplexers, Ethernet switches, optical transport systems, routers, wireless radio network access systems, etc.;
- consumer electronics (5.5%): broadband gateways and routers, game console systems, home data storage systems, home wireless access points, personal computer systems, printers and receiver terminals;
- automotive and industrial (5.5%): advanced driver assistance systems, autonomous vehicle systems, embedded network systems, industrial Ethernet switches, video surveillance systems.
Net sales are distributed geographically as follows: the United States (16.6%), China (43.5%), Taiwan (9.7%), Singapore (7.8%), Thailand (5.3%), Japan (2.9%), Malaysia (2.5%), Finland (2%) and other (9.7%).
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