Texas Instruments and Infineon team up to enter NVIDIA's supply chain! The two major analog chip leaders expand their territory to AI

According to the Zhitong Finance and Economics APP, Guo Mingchi, a well-known technology industry analyst from TF International Securities and an expert tracking the supply chain of tech giants such as Apple, stated on Wednesday that the two leading companies in the analog chip field, Texas Instruments (TXN.US) and Infineon (IFNNY.US), have been added to the new supplier list of AI chip giant NVIDIA (NVDA.US). Typically, the stock prices of listed companies that join NVIDIA's hardware product supply chain will experience a significant increase, as seen with South Korean memory chip giant SK Hynix and Taiwanese server manufacturer Foxconn.

"With NVIDIA's GB200 AI GPU server system nearing mass production, more and more core components are seeking new suppliers to support, which helps reduce costs and improve NVIDIA's quality control system," analyst Guo Mingchi wrote in a post on the social media platform X (formerly Twitter). "However, this also indicates that competition within the supply chain is becoming increasingly fierce."

According to the latest disclosures, Texas Instruments and Infineon now provide voltage regulator components, which were previously mainly provided by Monolithic Power Systems (MPWR.US), a manufacturer specializing in analog and mixed-signal chips focused on power solutions.

Furthermore, Monolithic Power Systems is currently providing integrated basic control components, a type of controller previously only provided by Delta Electronics, further demonstrating NVIDIA's gradual expansion of the AI server supply chain, seeking to enhance quality control systems and reduce supply costs.

Stimulated by this latest news, the stock price of analog chip leader Texas Instruments continued to rebound on Wednesday, hovering near its all-time high. The ADR of Infineon and the stock price of Monolithic Power Systems also experienced some degree of increase. However, NVIDIA's stock price saw a slight decline on Wednesday, ending the strong upward trend of the previous 5 trading days.

Texas Instruments is the world's largest analog chip manufacturer, with products that perform simple yet crucial functions, such as converting power into different voltages in electronic devices. Analog chips have played an indispensable role in various key functional modules and systems in electric vehicles in recent years, including power management, battery management, sensor interfaces, audio and video processing, and motor control.

Texas Instruments has the widest customer base and the largest product range among chip manufacturers, making its performance and outlook data a predictive indicator for various industry demands. Most of its chip products are used in industrial end markets and electric vehicles globally. The company stated earlier this year that demand from many terminal customers in the industrial category has started to improve, sparking optimism about overall performance improvement Infineon also occupies an important position in the field of analog chips, especially in the automotive electronics and power management sectors. Infineon focuses on power semiconductors and high-efficiency analog chip devices, providing solutions for global automotive, industrial, power management, and other applications. Particularly in the electric vehicle and energy management fields, Infineon's analog chips and power devices are highly competitive.

Many analog chip manufacturers focusing on the industrial and electric vehicle markets, including Texas Instruments, have seen continued poor performance since 2023. Their revenue has been continuously hit hard by customers' excess inventory, with customer order sizes slowing across the board. The sharp shortage of analog chips after the COVID-19 pandemic has led industrial customers to accelerate inventory hoarding.

More importantly, the sluggish demand for electric vehicles is difficult to alleviate. In the high-interest rate macro environment, global demand for electric vehicles has cooled significantly since last year. Coupled with the gradual withdrawal of government subsidies related to electric vehicles globally, this further weakens the demand for electric vehicles. Joining NVIDIA's AI server supply chain is a significant positive catalyst for the performance of both Texas Instruments and Infineon, while also providing other analog chip manufacturers with a new path, which is to turn to cooperation with AI server manufacturers to seize the wave of AI data center construction sweeping the globe