Nvidia, the U.S. chipmaker, exceeded expectations for its major revenue lines in its recent earnings report, with the exception of its automotive segment, which sells chip systems for assisted driving. The company’s CEO, Jensen Huang, had previously touted the automotive segment as its “next billion-dollar business,” but growth has slowed this year. The decline in automotive revenue is primarily due to lower overall auto demand, particularly in China, the world’s largest auto market. Chinese original equipment manufacturers are Nvidia’s primary market, but excess inventory among Chinese manufacturers and downward revisions of sales forecasts for high-end vehicles have led to a sequential decline in automotive revenue. Other competitors in the automotive chip market, such as Analog Devices, Mobileye, and Qualcomm, have also experienced revenue declines. Despite these challenges, Nvidia sees continued potential in the automotive industry, with $14 billion worth of automotive projects lined up over the next six years. Car manufacturers are still planning to incorporate assisted-driving capabilities into their vehicles, presenting opportunities for chip providers like Nvidia.
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