Monolithic Power Systems tumbles as Blackwell allocation ‘at risk,’ Edgewater says

Monolithic Power Systems (NASDAQ:MPWR) shares plummeted 14% in premarket trading on Monday as investment firm Edgewater Research said its allocation to Nvidia’s (NASDAQ:NVDA) Blackwell line of GPUs is “at risk.”

“Performance issues with MPWR’s [voltage regulator module/Power Management IC] appear likely to severely limit or eliminate MPWR’s allocation in Blackwell, with Renesas taking over B200 and [Infineon] assuming GB200 allocation as both are seen receiving rush orders in recent weeks,” analysts at the firm wrote in a note to clients, referencing Japanese firm Renesas and Germany’s Infineon (OTCQX:IFNNF) (OTCQX:IFNNY).

The analysts added that the root cause of Monolithic’s Power Management IC issue is “unclear,” but feedback suggests it may be tied to the product failure that was identified in Blackwell SKUs earlier this year with power consumption above 700 watts. To the analysts, that suggests either “limited or no” allocation for Monolithic for the B200 (1000 watts) and GB200 (1,200 watts) SKUs, with the company only potentially shipping for the B300A (700 watts).

“We hear NVDA will go through their confirmed orders to MPWR for the next few quarters, but we hear NVDA has canceled half of MPWR’s backlog, cutting all of their unconfirmed orders,” the analysts explained. “It appears that Renesas may see its Hopper allocation grow to 50% in 1Q or 2Q25, vs ~15% in 4Q24. We are not aware of plans for IFX to be qualified for Hopper. It sounds like NVDA Engineering has lost confidence in MPWR, and they have decided to focus on Renesas and IFX as their two primary suppliers.”

The analysts also noted that Monolithic’s solution to the hopper issue was seen as a “stopgap measure” by several supply chain partners, as opposed to a true resolution to the root cause.

“We view this as creating a substantial downside risk for MPWR’s Enterprise Data segment in 2025, and a material risk to the stock given heightened investor focus on MPWR’s AI performance, which currently overshadows the company’s strong results in other segments,” the analysts added.

Monolithic has not yet responded to a request for comment from Seeking Alpha.