According to CNBC news on April 3rd, due to the recent plunge in Ethereum prices, Wells Fargo Securities analysts have downgraded the expected performance of semiconductor giant Nvidia (Nvidia) in the latest research report. 'We believe that for encrypting digital currencies (hereinafter referred to as figures The decline in demand for mining GPUs will affect Nvidia’s earnings in June 2018 and beyond. 'The company analyst wrote.
After the 'benchmark' bitcoin of the digital currency experienced a crash in late December 2017, the Ethereum price once stood at its high in mid-January 2018, breaking through 1,200 US dollars. With the continuous release of signals from multiple countries to strengthen regulation, Ethereum also began to drastically decline with dramatic fluctuations in the digital currency. As of now, Ethereum prices have fallen to around $400, only one third of the highs. .
Similarly, after the price broke through 19,000 US dollars in the middle of December 2017 and approached 20,000 U.S. dollars, Bitcoin dropped sharply in the midst of violent fluctuations. As of now, the price has dropped to around 7,000 U.S. dollars, which is already 60% lower than the December high. .
Digital currency pushes up profits of related semiconductor manufacturers
Xiao Lei, a digital currency researcher, introduced to the 21st Century Business Herald that there are multiple methods for the issuance of digital currency, and PoS and PoW are the two mainstream methods. The former only needs to purchase nodes, and it is issued based on the amount of money held and the time it takes. There is no need for 'mine mining'; the latter requires hardware and equipment for mining, and its representatives include mainstream digital currencies such as Bitcoin, Ethereum, and Litecoin. Because of the 'brand' value of these coins, PoW has become the most relevant. The mainstream digital currency issuance method, 'this has promoted the development of the upstream industry, such as graphics cards, CPU hardware manufacturers, as well as production, assembly of mining machine manufacturers and so on.'
'The distribution method is not the same, it will lead to different upstream, but the downstream is actually the same. ' Xiao Lei said, 'The entire process includes the upstream mines, mining machine manufacturers, and then to the downstream exchanges, traders, and then It is auxiliary related funds, traditional VCs, media, assessment agencies, various industry associations, etc.
Xiao Lei pointed out that with the increasing demand for computing power by digging coins, ordinary machines can no longer be competent, and this requires very professional equipment. Like Bitland, Nvidia and other manufacturers of specialized hardware equipment can quickly benefit from it.
For different currency algorithms, the mainstream miner currently subdivides ASIC and GPU mining machines with the name of “mining machines and double flowers”. ASIC mining machines use chips designed for specific purposes, and are more efficient than general-purpose computers using CPUs. It is a lot higher, and Bitland is taking this opportunity to come to the fore; and due to the use of graphical algorithms for digital currency such as Ethereum, the speed of graphics cards will be the highest, and Nvidia and AMD, which have obvious advantages in the GPU field, will also be able to take advantage of the wind.
Lin Jianhong, research manager of Jibang Tuoyuan Industrial Research Institute, told 21st Century Business Herald reporter that the application of new products will often bring opportunities to semiconductor manufacturers from the midstream and downstream, while the digital currency 'mine mining' requires high-speed computing, compared to other In the semiconductor sub-industry, the following four IC sub-industries have more growth points for output value.
One is the IP company, especially the High Speed I/O, because of the existence of a single IC in high-speed computing to perform multiple iterations, operations or ASIC/ASIC, or data transmission between ASIC/Memory; the second is the introduction of design services, Assist IP selection and assist design, negotiate the production capacity of foundry; Third, the foundry, due to the requirements of advanced process capacity, need to ensure the amount of state, and IP and design services import patent fees and sales There is a positive correlation. The fourth is the special DRAM industry. Due to the need of ASIC/Memory transmission, special regulations are designed to increase the output value.
However, in Xiao Lei’s view, the recent poor performance of digital currencies such as Bitcoin will naturally affect upstream semiconductor companies such as Nvidia and Bitcoin, which have benefited greatly from the digital currency boom.
'However, this demand has not yet come to an end. With the devaluation of the digital currency, the phased demand will decline. But in the long run, with the development of digital currency and blockchain, the overall base for the demand for these hardware is rising. The space for the future is still relatively large. 'He thinks, 'Currently, they have a first-mover advantage, but there will be more and more competitors.'
Cheng also mining, defeat also mining?
Recently, Wells Fargo Securities analyst David Wong said in a research report: 'In recent months, we have felt that the close relationship between Nvidia and digital currency mining has put the company in multiple risks. In addition, we are also worried about the company. Growing issues in games, cars and data centers. '
To this end, Wells Fargo Securities maintains Nvidia's stocks 'underperform' rating and sets the target share price at US$100, and also reduces the Nvidia’s FY2019 earnings per share forecast from US$5.39 to US$5.26.
However, compared to Nvidia, the pressure from Bitland may come more urgently. Lin Jianhong pointed out that Nvidia itself is a company with GPU technology as its core. In recent years, it has gradually begun to transform into AI chip companies, including vehicles, data centers and other fields. Development.
CNBC once quoted the analysis agency Bernstein's point of view on Feb. 23 that the operating profit of Bitcontin may reach an astonishing 3 billion to 4 billion U.S. dollars in the past year, while in the same period, the operating profit of veteran semiconductor giant Nvidia was only 3 billion U.S. dollars. Bernstein believes that Bitland holds a dominant position in the Bitcoin mining industry, accounting for 70% to 80% of the market share in bitcoin mining machines and ASICs.
'ASIC generally refers to a specific-purpose chip. If the miner's shipment is not good, mining ASICs have to be transferred to other uses. The difficulty and complexity are higher.' Lin Jianhong said, 'Unlike ASIC, GPU itself is not only mining In addition, it is easy to switch to Gaming or other applications that require mathematical calculations. Therefore, if bitcoin price fluctuations cause the decline in miner demand, the impact on GPUs is relatively less than that of ASICs.
'The drastic fluctuations in the prices of digital currencies mean that the long-term and stable development mode of digital currency miners cannot be seen at present, so ASIC companies must use their funds to make profits and find ways to find and invest in the next technology that can profit from them. Market risk. 'Lin Jianhong suggested that 'For the foundry companies, if they cannot see the long-term stable development mode of the digital currency mining machine, the corresponding production capacity expansion plan needs to be relatively conservative. It cannot be simply from the current ASIC. The amount of investment will be used to estimate the capacity requirements for expanding the plant in the next few years to ensure that the plant will have reasonable capacity utilization in the medium term.
In addition, from the perspective of the market environment, in addition to concerns about the impact of the devaluation of digital currencies, the recent decline in the stock price of Nvidia has many other factors.
According to Bloomberg News on April 3rd, Apple is currently planning to use its own chips on its Mac series computers to replace its current use of Intel processors. The plan will be implemented as early as 2020. Reported that Apple should The program, code-named 'Kalamata', although still in its early stages, is part of Apple's long-term strategy to implement its own chips for all products, including Mac computers, iPhone phones, and iPad tablets.
Affected by this news, Intel's share price fell sharply, while the share prices of US semiconductor industry companies and related Apple suppliers began to enter the 'sag' mode. On the April 2nd of the US Eastern Time, Intel fell by 6.07%, while Nvidia fell by 4.55%. Qualcomm dropped 2.89%, Micron fell 3.99%, AMD fell 5.17%, Marvell fell 3.81%, CyberOptics fell 7.22%, Amkor fell 4.84%, Applied Materials fell 4.89%, Lam Research fell 4.57%, ON Semiconductor fell 4.46%, Terry It fell 4.2%, and Maxim Integrated fell 4.67%. PHLX Semiconductor, which is one of the major indicators of global semiconductor industry's economic prosperity, also fell 3.9%.
From the perspective of the overall performance of technology stocks, due to the recent scandal of Facebook data, Tesla’s auto accident death, EU data protection regulations and other incidents, plus concerns about the “trade war” trend between China and the United States, and the overall decline in technology stocks. In addition to the aforementioned semi-conductor companies, Amazon’s share price also fell by 5.21% on the same day, Facebook fell by 2.75%, Microsoft fell by 3.01%, Google Class A fell by 2.36%, Tesla fell by 5.13%, and Apple dropped by 0.66%.