What Is Next For The Semi-Conductor Industry: TSMC, INTEL, QUALCOMM, Micron Technologies

What Is Next For The Semi-Conductor Industry: TSMC, INTEL, QUALCOMM, Micron Technologies


Semi-Conductor Industry past 10 years returns

Semi-Conductor Industry has been the best-outperforming industry in the past 10 years and will still remain to outperform other industries because of its high demand globally varying from its uses in Computers to its major uses in the auto sector.

Global Forecast for the Semi-Conductor Industry

  • The global semiconductor chip shortage is likely to continue till 2022 before it eases gradually.
  • The global shortage of semiconductor chips has triggered concerns as companies around the world fail to meet the rising demand for a wide range of essential as well as modern tech products.
  • The shortage has intensified over the past couple of months.
  • A recent analysis by Goldman Sachs suggested that at least 169 industries have been impacted by the global chip supply shortage.

An overview of the Semi-Conductor industry

Globally, Taiwan’s TSMC is the most dominant chip supplier.

The US semiconductor industry has continued to maintain its strong position even though sales growth in 2019 was negative. It has maintained very high levels of investment in research and development (R&D) and capital expenditure.

In 2020, the global semiconductor industry reported revenue growth of 6.5% to reach US$440 bn.

As per the 2021 Global Semiconductor Industry Outlook, the logic and memory chips segments were among the fastest growing with over 10% growth reported from each of these sub-categories in 2020.

In February 2019 the Semiconductor Industry Association (SIA) announced that in 2018, more than 1 tn chips were sold, a record.

Following record sales of US$468.8 bn in 2018, global sales in 2019 decreased 12% to US$412.3 bn, largely due to cyclicality in the memory market.

Following are the list of Top Semi Conductor Manufacturing Companies

TSMC: Taiwan Semiconductor Manufacturing Company

MARKET CAP: 0.54 TRILLION USD

TSMC stands for Taiwan Semiconductor Manufacturing Company headquartered in Hsinchu, Taiwan.

TSMC deployed 281 distinct process technologies and manufactured 11,617 products for 510 customers in 2020 by providing the broadest range of advanced, specialty, and advanced packaging technology services.

TSMC is the first foundry to provide 5-nanometer production capabilities, the most advanced semiconductor process technology available in the world.

Intel Corp

MARKET CAP: 217.86 BILLION USD

It is the world’s largest semiconductor chip manufacturer by revenue and is the developer of the x86 series of microprocessors, the processors found in most personal computers (PCs).

Intel supplies microprocessors for computer system manufacturers such as Lenovo, HP, and Dell. Intel also manufactures motherboard chipsets, network interface controllers and integrated circuits, flash memory, graphics chips, embedded processors, and other devices related to communications and computing.

In 2020, Dell accounted for about 17% of Intel’s total revenues, Lenovo accounted for 12% of total revenues, and HP Inc. accounted for 10% of total revenues.

Qualcomm

MARKET CAP: 170.31 BILLION USD

Qualcomm is a global semiconductor and telecommunications company that designs and markets wireless communications products and services. Telecommunications companies worldwide use Qualcomm’s patented CDMA (code division multiple access) technology, which has played an integral role in the development of wireless communications. Its Snapdragon chipsets are found in many mobile devices.

Over the years, Qualcomm has expanded into selling semiconductor products in a predominantly fabless manufacturing model. It also developed semiconductor components or software for vehicles, watches, laptops, wi-fi, smartphones, and other devices.

Micron Technology

MARKET CAP: 86.773 BILLION

  • Micron Technology is a semiconductor company that develops and makes memory and storage solutions.
  • Micron products are used in automobiles, consumer electronics, communications products, servers, and computers.
  • Its Compute and Networking Business Unit generates the largest share of revenue and operating income.
  • Micron is joining forces with Tata Communications to provide IoT solutions.

Compute and Networking Business Unit (CNBU)

  • Micron’s CNBU segment includes memory products that are sold into markets for cloud server, enterprise, graphics, networking, and other clients, and includes sales of certain 3D XPoint products.7 For Q1 FY 2021, CNBU generated $2.5 billion in revenue, accounting for more than 44% of the company’s total revenue. Operating income for the quarter was $483 million, comprising about 50% of the total.
  • That makes CNBU Micron’s largest source of both revenue and operating income. The segment’s revenue rose 28.7% while operating income grew 20.4% compared to the year-ago quarter.8

What are the reasons behind global chip shortage?

Underestimating the Increasing demand

A big part of this is the pandemic causing everyone to want a new laptop/desktop for remote work, or getting back into gaming, or related. Part of it is the rise of other industries — EVs are starting to take off in a big way and they need more electronics than an ICE vehicle, cryptocurrencies are booming again which causes a huge spike in demand for anything that can mine, etc.

Underestimation of that demand as the fabrication industry has consolidated. Only two leading-edge foundries exist for third parties today: TSMC and Samsung. And realistically, TSMC is solidly ahead of Samsung.

Pandemic-related supply chain disruption

This can appear in unexpected ways: it’s not just slowdowns at the foundries themselves, but also in the movement of goods from manufacturing location A to manufacturing location B, or disruption in smaller ICs(Integrated Circuits)/SMT(Surface-Mount Technology) components that people rarely think about.

Increased complexity of fabrication

Making something at 5nm or 7nm or similar is tough, and either requires expensive/time-consuming/rare EUV machines or requires multi-patterning DUV… which itself takes time. Building a new leading-edge plant costs a fortune ($15b+) and no one wants to spend that much just to have the location running at 70% capacity. Adding more layers to the DUV process means it takes more time, which lowers wafer throughput.