As we have moved down from a CAGR of ~9% over last three decades to a CAGR of ~5% in the current decade, it’s time to check the realities. It can be definitely argued that a 5% of CAGR over a solid base of ~$378 billion should be considered good enough. In my view that’s the sign of maturity in the semiconductor market. At the same time we are seeing certain upcoming businesses like IoT that touches upon several other businesses such as automotive, medical, home etc. These businesses can bring new life to semiconductor industry, but who could be the winners? Generally speaking it’s the maturity cycle of an industry when new players emerge either to take on the existing businesses or come up with new products and technologies to change the scenarios. Also mergers and acquisitions take place between existing players. We are seeing all of these happening in the semiconductor space these days.
I reviewed IC Insights’ report of top20 semiconductor suppliers according to their sales numbers in 1Q 2015. This report shows some interesting data that indicates the changes we may see in the top rankings of semiconductor companies in the near future.
In the report there are 7 companies in US, 3 in Taiwan, 2 in South Korea, 4 in Japan, 3 in Europe and 1 in Singapore. The group of top20 companies includes pure-play foundries, fabless companies and IDMs. We have seen their 2014 results earlier, but the changes between 1Q2014 and 1Q2015 as mentioned in the 1Q2015/1Q2014 column of the table reveal a lot about changing trends.
The average sales of top20 companies increased by 9% compared to 6% for the overall semiconductor industry. What is interesting is that out of 7 US companies, sales for 6 companies increased by less than 7%, only GlobalFoundries had a sales increase by 21%. Intel was flat at 0%. On the other hand, 5 companies outside US showed more than 20% increase in sales; these are TSMC at 44%, SK Hynix at 25%, Avago at 24%, Sony at 26%, and Sharp at 62%.
The Japan-based Sharp had a dramatic entry into top20 list of semiconductor companies with a whopping 62% sales increase, riding on its success in the CMOS image sensor market. The other non-US company that entered the top20 list is Taiwan-based pure-play foundry UMC. Who were pushed out of the top20 list? They are US-based companies NVidia and AMD. It’s also interesting to note that Taiwan-based Media Tek has entered the list of top10 ranks.
My other investigation into the data shows that the 7 US companies accounted for $116909 million sales in 2014, i.e. 45% of total top20 companies’ sales, whereas the sales in 1Q 2015 were $27492 million, i.e. less than 43% of total top20 companies’ sales in 1Q 2015.
On the other hand, if I add up the numbers of 3 Taiwan-based and 2 South Korea-based companies, they account for $90454 million, i.e. 35% of total top20 in 2014, and $23643 million, i.e. ~37% of total top20 in 1Q 2015.
Clearly sales trend is pointing upwards for the east-Asia companies and downward for US companies. Well, there are mergers also happening which will definitely change equations in the top20 leaders of the semiconductor industry. NXP along with Freescale will push Europe into top10. ST is just out of top10 as per 1Q 2015 data. Similarly there are other equations that can change the top10 and top20 rankings for companies.
It will be interesting to watch the top20 list through 2015 and 2016. Read the IC Insights’ report here.
Also read “30+ Years of Semiconductors – The base matters!” to check the semiconductor sales trend over last 30 years, and “Look who is Leading the World Semiconductor Business” to check the 2014 list against that of 2013.
Pawan Kumar Fangaria
Founder & President at www.fangarias.com