How they spend their money

Semiconductor companies’ ratios have shifted.

Jon Peddie

A little over two years ago, most of the semiconductor companies held an inventory-to-sales ratio at an average of 39%. Those ratios have steadily climbed since then, with one notable exception: Nvidia. Today’s average inventory-to-sales ratio is a whopping 63% and was 72% last quarter. Nvidia drove down the average this quarter and last quarter.

Inventory levels have been steadily rising.

The good news is the R&D expenditures have also increased from an average of 21% in Q1’21 to 22% this quarter and 27% last quarter.

R&D spending has been going up slightly.

We’ll update these charts after Nvidia reports and we publish the Q3’23 Market Watch report.

In Q2’23, Nvidia drove its inventory down to $4.3 billion, while sales soared to $13.5 billion,  making the ratio fall to 32%. R&D grew to $2 billion, just 0.02% of revenue.