Soaring 160%! Is the partnership between Nawei Semiconductor and NVIDIA an opportunity or a bubble?

According to Zhitong Finance APP, on Thursday, U.S. stocks, Nanwei Semiconductor (NVTS.US) surged over 160%, shocking the market, after the company announced a strategic partnership with AI giant NVIDIA (NVDA.US). This collaboration could become a turning point for Nanwei Semiconductor, which is expected to become a key partner in NVIDIA's future AI chip production line.

So, what is the potential revenue impact of this deal on Nanwei Semiconductor, what are the details of the company's business model and this collaboration, and should investors consider buying in? The following will provide an in-depth analysis.

Company Business Analysis

Nanwei Semiconductor focuses on next-generation power electronics products.

Nanwei Semiconductor specializes in new generation power electronic technologies, with its core products, Gallium Nitride (GaN) and Silicon Carbide (SiC) semiconductors, offering advantages over traditional silicon chips, such as faster switching speeds, higher energy efficiency, and smaller size, making them particularly suitable for high-performance computing and data center applications. Although it is smaller than traditional semiconductor giants, Nanwei Semiconductor is recognized as one of the most advanced pure technology companies in the GaN/SiC technology field.

Collaboration Details Interpretation

According to the official statement, Nanwei Semiconductor will be deeply involved in the development of NVIDIA's next-generation AI chips (such as Rubin Ultra).

The two parties have jointly developed an 800V High Voltage Direct Current (HVDC) power architecture, which will be applied to support NVIDIA's "Kyber" rack system, providing power for GPUs like Rubin Ultra. By adopting Nanwei Semiconductor's GaNFast Gallium Nitride and GeneSiC Silicon Carbide technologies, the new architecture is expected to improve energy efficiency by 5% while reducing maintenance costs and cooling expenses by 70%.

NVIDIA's choice of Nanwei Semiconductor among many competitors fully demonstrates its recognition of the latter's technological strength.

Financial Impact Assessment

In 2024, Nanwei Semiconductor's revenue is only expected to be $80 million, but this collaboration could completely change the company's development trajectory. Considering that NVIDIA's data center business generated over $47 billion in revenue in the past 12 months and continues to grow, although the specific revenue impact is difficult to quantify, this will undoubtedly bring significant development opportunities to Nanwei Semiconductor, which was relatively unknown just a few months ago.

Despite exceeding expectations in the last quarter and forecasting revenue of about $15 million for the next quarter, analysts still expect revenue to decline over the next year—after all, the collaborative chips won't go into production until next year at the earliest.

Valuation Analysis

Before the announcement, Nanwei's stock price had been declining, approaching book value. However, on Thursday, the stock's price-to-book ratio rose to 2.8 times, and the price-to-sales ratio exceeded 10 times.

For a growth-oriented company like this, a reasonable valuation must consider two key factors: Can the AI market continue to expand? Does Nanjing Microelectronics Technology significantly lead its peers?

Although there are numerous optimistic analysis reports on NVIDIA and the AI industry, it is still too early to draw conclusions regarding the second point. After all, NVIDIA has many partners, and not all companies can achieve success (such as Super Micro Computer (SMCI.US)).

Risk Warning

Investing in Nanjing Microelectronics also requires attention to multiple risks. First, as an emerging company, its capacity ramp-up may face complex manufacturing and supply chain challenges; second, there is a prominent customer concentration risk, as excessive reliance on NVIDIA poses significant hazards; finally, there are many competitors in the GaN/SiC field, with established players like Infineon (IFNNY.US) and STMicroelectronics (STM.US) keeping a close watch.

Conclusion

Despite the favorable conditions that make many investors eager to enter the market, it remains important to stay rational. The market's pursuit of hot news, increased volatility, and short covering may all contribute to today's dramatic fluctuations.

But does this mean that the rise in stock prices has sufficient support? Currently, the evidence is not compelling—Nanjing Microelectronics still faces fierce competition, has yet to achieve profitability, and has not been fully validated by the market in many aspects.

From a longer-term perspective, the company has shown an overall downward trend since its IPO. Investors should wait for market sentiment to stabilize, as there may be better buying opportunities in the future. Of course, judgments may be incorrect, but it must be recognized that this stock has strong speculative attributes, and AI is indeed a highly competitive field