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Top 20 Semiconductor Companies

For the first time since 1993, the semiconductor industry is expected to witness a new number 1 supplier.  Samsung first charged into the top spot in 2Q17 and displaced Intel, which had held the number 1 ranking since 1993.  In 1Q16, Intel’s sales were 40% greater than Samsung’s, but in just over a year’s time, that lead has been erased.  Intel is now expected to trail Samsung in the full-year 2017 semiconductor sales ranking by $4.6 billion. Samsung’s big increase in sales this year has been primarily driven by an amazing rise in DRAM and NAND flash average selling prices.

 

In 1993, Intel was the number 1 ranked supplier with a 9.2% share of the worldwide semiconductor market (Figure 1, which does not include the pure-play foundries).  In 2006, Intel still held the number 1 ranking with an 11.8% share. In 2017, Intel’s sales are expected to represent 13.9% of the total semiconductor market, down from 15.6% in 2016. In contrast, Samsung’s global semiconductor marketshare was 3.8% in 1993, 7.3% in 2006, 12.1% in 2016, and forecast to be 15.0% in 2017.  Thus, it appears that Samsung’s accession to the number 1 position in the semiconductor sales ranking this year has had more to do with Samsung gaining marketshare than Intel losing marketshare.

 

For 2017, the top 10 sales leaders are forecast to hold a 58.5% share of the worldwide semiconductor market.  If this occurs, this would be the largest share of the market the top 10 companies held since 1993.

 

Memory giants SK Hynix and Micron are expected to make the biggest moves in the top-10 ranking in 2017 as compared to the 2016 ranking.  Spurred by the surge in the DRAM and NAND flash markets, each company is forecast to move up two spots in the top-10 ranking with SK Hynix occupying the third position and Micron moving up to fourth.

 

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Excluding foundries, there is expected to be one new entrant into the top-10 ranking in 2017—U.S.-headquartered Nvidia, which is forecast to register a 44% increase in sales this year.  Nvidia is expected to replace fabless supplier MediaTek, whose 2017/2016 sales are expected to be down by 11% to $7.9 billion.

 

Six of the top-10 companies are expected to have sales of at least $17.0 billion in 2017.  As shown, it is forecast to take $9.2 billion in sales just to make it into this year’s top-10 semiconductor supplier list.  It should be noted that if Qualcomm and NXP’s expected sales for this year were combined, as if Qualcomm’s pending acquisition had already occurred, the companies’ 2017 sales would be $26.3 billion, enough to place the combined entity into third place in the top 10 ranking.  Moreover, Broadcom’s current attempt to acquire Qualcomm, while Qualcomm itself is in the process of attempting to acquire NXP, adds additional uncertainty with regard to the future top 10 ranking.

 

As would be expected, given the possible acquisitions and mergers that could/will occur over the next couple of years (e.g., Qualcomm/NXP, Broadcom/Qualcomm/NXP, etc.), as well as any new ones that may develop, the top-10 semiconductor ranking is likely to undergo some significant changes over the next few years as the semiconductor industry continues along its path to maturity.

 

The top-20 worldwide semiconductor companies 2016 (IC and OSD—optoelectronic, sensor, and discrete) sales ranking for 1Q16 is shown in Figure 1.  It includes eight suppliers headquartered in the U.S., three in Japan, three in Taiwan, three in Europe, two in South Korea, and one in Singapore, a relatively broad representation of geographic regions.

 

The top-20 ranking includes three pure-play foundries (TSMC, GlobalFoundries, and UMC) and six fabless companies. If the three pure-play foundries were excluded from the top-20 ranking, U.S.-based IDM ON Semiconductor ($817 million), China-based fabless supplier HiSilicon ($810 million), and Japan-based IDM Sharp ($800 million) would have been ranked in the 18th, 19th, and 20th positions, respectively.

 

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IC Insights includes foundries in the top-20 semiconductor supplier ranking since it has always viewed the ranking as a top supplier list, not a marketshare ranking, and realizes that in some cases the semiconductor sales are double counted.  With many of our clients being vendors to the semiconductor industry (supplying equipment, chemicals, gases, etc.), excluding large IC manufacturers like the foundries would leave significant “holes” in the list of top semiconductor suppliers.  As shown in the listing, the foundries and fabless companies are identified.  In the April Update to The McClean Report, marketshare rankings of IC suppliers by product type were presented and foundries were excluded from these listings.

 

Overall, the top-20 list shown in Figure 1 is provided as a guideline to identify which companies are the leading semiconductor suppliers, whether they are IDMs, fabless companies, or foundries.

 

 

In total, the top-20 semiconductor companies’ sales declined by 6% in 1Q16/1Q15, one point less than the total worldwide semiconductor industry decline of 7%.  Although, in total, the top-20 1Q16 semiconductor companies registered a moderate 6% drop, there were seven companies that displayed a double-digit 1Q16/1Q15 decline and three that registered a ≥25% fall (with memory giants Micron and SK Hynix posting the worst results).  Half of the top-20 companies had sales of at least $2.0 billion in 1Q16.  As shown, it took $832 million in quarterly sales just to make it into the 1Q16 top-20 semiconductor supplier list.

 

There was one new entrant into the top-20 ranking in 1Q16—U.S.-based fabless supplier AMD.  AMD had a particularly rough 1Q16 and saw its sales drop 19% year-over-year to $832 million, which was about half the $1,589 million in sales the company logged just over two years ago in 4Q13.  Although AMD did not have a good 1Q16, Japan-based Sharp, the only company that fell from the top-20 ranking, faired even worse with its 1Q16/1Q15 sales plunging by 30%!

 

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In order to allow for more useful year-over-year comparisons, acquired/merged semiconductor company sales results were combined for both 1Q15 and 1Q16, regardless of when the acquisition or merger occurred.  For example, although Intel’s acquisition of Altera did not close until late December of 2015, Altera’s 1Q15 sales ($435 million) were added to Intel’s 1Q15 sales ($11,632 million) to come up with the $12,067 million shown in Figure 1 for Intel’s 1Q15 sales.  The same method was used to calculate the 1Q15 sales for Broadcom Ltd. (Avago/Broadcom), NXP (NXP/Freescale), and GlobalFoundries (GlobalFoundries/IBM).

 

Apple is an anomaly in the top-20 ranking with regards to major semiconductor suppliers. The company designs and uses its processors only in its own products—there are no sales of the company’s MPUs to other system makers. Apple’s custom ARM-based SoC processors had a “sales value” of $1,390 million in 1Q16, up 10% from $1,260 million in 1Q15.  Apple’s MPUs have been used in 13 iPhone handset designs since 2007 and a dozen iPad tablet models since 2010 as well as in iPod portable media players, smartwatches, and Apple TV units.  Apple’s custom processors—such as the 64-bit A9 used in iPhone 6s and 6s Plus handsets introduced in September 2015 and the new iPhone 6SE launched in March 2016—are made by pure-play foundry TSMC and IDM foundry Samsung.

 

Intel remained firmly in control of the number one spot in 1Q16.  In fact, it increased its lead over Samsung’s semiconductor sales from 29% in 1Q15 to 40% in 1Q16.  The biggest moves in the ranking were made by the new Broadcom Ltd. (Avago/Broadcom) and Nvidia, each of which jumped up three positions in 1Q16 as compared to 1Q15.

 

As would be expected, given the possible acquisitions and mergers that could/will occur this year (e.g., Microchip/Atmel), as well as any new ones that may develop, the top-20 semiconductor ranking is likely to undergo a significant amount of upheaval over the next few years as the semiconductor industry continues along its path to maturity.

 

 

This is a guest post by IC Insights which provides market research for the semiconductor industry.

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