Ambarella Speaks On Huawei, Shortages, And China

By Isabella Cheng, Published Sep 09, 2020, 09:44am EDT (Info+)

The Huawei Hisilicon shortage is impacting the global market, with major chip rival Ambarella addressing this in its most recent investor call.

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In this report, we examine Ambarella's Q2 FY2021 (C2020) investor call, including comments on:

  • Huawei HiSilicon shortages
  • Dahua and Hikvision
  • China v. outside of China growth opportunities
  • New products using Ambarella SoC
  • Panasonic switching from Huawei
  • Ambarella's Q2 financial performance

Executive *******

***********'* ** ****** (*****) ******** ****, *** ******* **** ** ******* to **** ** ***-**** *** **** market ***** ** ********* ********* ** provide ****** ****, *** ** **** face ***** *********** ** ********* *****-*** chips. *****, ********* *** *** * number ** **** ******* *** ******* camera ************* **** *** **** ******* as ************* *** ************ ******** ****-********* solutions.

Huawei *** ************* **** *********** ********* *********

********* ************ *** ********* ******** *** that ********* **** **** ******** ** a ****** ** ****, ****** "********* cannot **** ***** ********* ****". **** **** *****************'* ******** ** *** ** ********** of ********'* ****** ********** ** ********** ******* **** ** foreign ********** ***** ** ************ ******* for ******. **** *** ****** ****, whom ****** ********** **** ********** **, to ***** ********* ********** *** **** its **** ***** ** ********* ***** on ********* **.

*******, ********* ***** "* *** ** customers.. ***** * **** ****** ** inventory ** *** ** **** *** this *********** ******." ********* **** ******** seeing ********* ********* ** ****** ******* HiSilicon ** "******* ********* ** * very, **** **** ***, ***** **** caused * *****-**** ********** ** *** supply ****".

********* ******* ** **** ******* ******** on ***-*** ***** **/**** ********* ***** are **** ** *** ***** ** gain ****** ***** *** ***-**** ***** chips ** *****. *********'* **** ***** is ** ********* ****** ** ****-*** chips, ****** *********, ***** *****, **** say, ** ** ********* ***-***, "$* to $*, $*" ** *****. ******* pressure ** ***-*** ***** ***** ***** because ***** ** *********** *********** ** the ***-*** **** **** ***** *** Taiwan **** ******. *** ****** ************* looking *** ***-**** ***** *****, ********* believes ***** *** *** ***** *********** out *****, ******* *** ******* ** a "**** ********" ** **** ****** share.

Dahua *** ********* ********** **** ** ********* *******

***** ***** *** ********* ********* *** ~20% ** *********'* ***** ******* * year ***, **** **** ** *** just * *** ******-***** **********. ********* continues ** ****** **** *** ******** ordering ******** **** **** **** ****, citing ***** *** *********'* ******* ** use ** *** ****** ***** ** Ambarella **** **** **** *** ************ concerns ** ******* *** **** ********:

****** ** (**** ****) *** ** (October ****) ** *** ***** ****** year ****, ** ********* ***** *** customers, *** ** *** ************ ***********, built ** ~$*** ** ****** ***** of ***** ********* ****. ***** ****, we **** ************ ****** ** ****** this ****** ***** ** ** ******** in *** ****** **** ** **** year, *** ** **** **** *********** the **** ** ***** ************, **** driven ** *** ************ ***********. ***** now, ** ***’* **** ** *** or **** ******* *** ** ****, it ** **** ** ***********, *** we **** ******** ** ******* ****.

Opportunities *** ****** ****** / ******* ***** **********

********* *** ****** **** ******* ***** taking ***** **** ***** ***********. *** CEO ****** **** **** "**** **** more ** ******* ****** ***** -- or **** ** ****** ***** ****** China ** *** **** ******" ** the ******** ****. ** ********, ** its ************ ** ****, ********* *** ********* ***** *** growth ** *****, ****** ***** ********* may ** ********* ***** ***** ** components *** **** ** *** ***** restrictions. ***, ********* ** **** ********** about *** ****** ****** ***** ***** Q2 ** "******* ** ****** ****** have ****** ********* ***** *** ********** of ****** ** ******** *********." ********* further *********:

****** *** ** ***** (**** ****** quarter) ** ***** ** **** ***** to *** ********** ************* ** **** market ***** ** *****. ** *** not **** ** ******* ******** ***** until ** **** ********** *** **** are ********, *** ** *** *** we *** ****** ******** **** **** business *** *********** *********** **********, *** this ******** ******** **** ***** *** small *********. **** *** ************ *********** changing **** ** ****, ** ****** cautious ***** *********** **** ******, *** we ** **** *** ******** ** have **** ** ***** *** ***** mentioning ** *** **** ****** ******** call.

********* ********* ** ** ********* ** its ****** ******* ** ***** *** has **** "********** ** *** ****** design *** ******** *** *** ****** SoCs ** ************ ** ******* ** all *********** *** * **** ****** pipeline ** *** ******** ************* ******* over *** **** ** ******."

"Strong ****** *** ********" *** *************

********* **** **** **** "****** ****** win ********" ** *** ***********, ********** multiple *** ******** ***** ********* ***** in *** ** ****, ********* * continuation **** ** ** ********* *-*** Ambarella *** ***********.

********* **** ********* ** ***** ** providing *** *** *** ******** ********'* Avigilon ** ******* ******** *********** ********* solution. ********* ** **** ******* ******* for ******** ************ ********, **** ** home ********** *******, ******** ** *** not ******** *** ***** ****** ************ specifically. ****, ******* **** ****, ********* announced******** ****** **** **** ********* **** as ****** *******, ***** ********, *** PIPS (*********).

Panasonic *-*** ********** ********* *** *******

***** ********* *** ******* ** ************** ****** ********* *** ******* *** not **** *********, *********, ** **** ****, ****** Panasonic ********** ** **** *** **** Ambarella ***** ******:

******* ******** ****** ******** ** ****, previously *********, ********* ** ********* **** new ****** ***** ** *** ****** SoCs ********* ***** ********* ******* ******* in *** ******** *******.

********, ** **, ********* *-*** ********** 10 *** ****** ****** ***** ** Ambarella ****, **** ********* ***** *********'* new ****** ******** ** ** ** an ******* ** *** ********* **** gain **** ****** **** ** ************* turn **** **** ***** *********:

** *****'* **** *** *** ********* react ** **** ****** [*** ********* restrictions] ***, *** *******, **** ** said ******, ** **** **** **** is ***** ** ******** ** **** us ******* *****. * ***** ******* China, ** ******* ******** **** ********* use ********* ** *** ****. *** you *** *** **** **** *** earnings **** **** ****, ** ** see **** **'** ******* ** ****** wins **** ****.

Ambarella's ***** ************ ******* ********

*********'* ******** ****** ******** ********* ** the *** ****** ****** ************ (**** Q1 ** **). ***** ************ ******** was ****, **** ******** ********* ************. Ambarella ******* "* ******* ** ****** from *** ***** **** ******* ****** makers ********* ******* ****-**** ** ****** earlier ** *** ******* ** * result ** *** ****** ** *****-**" and **** *** ********* ******** ********* security ******** "**** **** ** ******** in *** ****** ** ************* ** the ****** **** ** *** *******."

**** **% ** *********'* ********** ***** **** *** ******** ****** market, ***** **** * ***** ***, about **-**% ** *** ***** ******* came **** **** ******.

Huawei ********* **** *******

****** ************* *** ******* ** **** an *********** ** ********* ** ********* is *** **** ******* ** *** NDAA *** *** **** ***** ********** problems. *** ** ********** ** ******* recently *********** ** *********** ********* ******* ****, Semiconductor ************* ************* ****, *****’* ******* *********, *** **** consider ** * **** *********** *** Huawei ** **** **** **********. ***** China's **** ******** ** ************ ******** due ** ************ ******, ******** **** manufacturers, **** ** *********, ***** **** advantage ** **** *********** ** **** market *****.

Comments (7)

There are a few things I would like to know.The first is, which Chinese or Taiwanese manufacturers offer low-end CV chips? I only know about Mstar in Taiwan. Also, are there any manufacturers in Korea that make these CV chips?And what is the approximate price range of mid-high range chips?

Thank you.

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The first is, which Chinese or Taiwanese manufacturers offer low-end CV chips?

Mstar is a competitor, as is Novatek which is also in Taiwan. This image (taken from an Ambarella investor presentation deck) might be helpful: IPVM Image

These are who Ambarella sees as their competitors. SigmaStar, Fullhan, Ingenic are all China companies.

Also, are there any manufacturers in Korea that make these CV chips?

Hanwha makes the Wisenet SoC

And what is the approximate price range of mid-high range chips?

The approximate price range is probably somewhere from $10-30, versus the $2-4 low-end chips that Ambarella cited in their call. This price likely fluctuates depending on the volume that a company would purchase from a chipmaker.

Feel free to comment below if there's anything else I can help clarify!

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Thank you for this very useful information!The only surveillance camera SoCs I can think of are Ambarella and Hisilicon, so I learned a lot.Qualcomm is on this table, but I haven't heard of camera manufacturers using them. What camera manufacturers use Qualcomm?What are the strengths of Qualcomm SoCs?

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Cisco Meraki's 2nd Generation MV series cameras use Qualcomm, although they use Snapdragon chips which are typically used in smartphones, not video surveillance.

Qualcomm recently announced the QCS610/410 - I believe the main sell is that the chips "encompass machine learning, edge computing, sensor processing, voice UI enablement and integrated wireless connectivity" (which Qualcomm said were more high-end functionalities) into the mid-tier camera market.

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Many of the OSSA Android-based cameras are using the Qualcomm SoC.

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Is there any update about the SoC shortage recently? it will be much helpful if any info could be shared.

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The update that I've gotten is that there's been no improvement/breakthrough from HiSilicon. China camera manufacturers (particularly those that are relatively big players and, therefore, were significant HiSilicon customers) have been migrating their camera chips to other players like Sigmastar, Novatek, Fullhan for months now. They will continue that migration. We also know that Hikvision and Dahua are working through their 1.5-years' worth of HiSilicon stockpile, as Ambarella discussed in its most recent earnings call (See: Ambarella’s 2020 Financials and Dahua Design Wins Examined)

I think the bigger problem now is the availability and supply of chips given industry-wide capacity constraints, not just contained to HiSilicon. Computers, cars, phones, PS5s, and of course, video surveillance, all have been affected by increased demand over the last year and constrained foundry capacity.

What I've gathered is that larger camera companies have the inventory to take in some of the price increases that have come with decreased supply, but things are uncertain for the next few months (i.e. possible price increases for cameras to come). However, smaller China companies (e.g. OEMs, small Shenzhen surveillance manufacturers) have been impacted by rising chip prices/raw material costs, with some increasing prices 8-12% this month.

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