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Thursday, January 04, 2018

Top 10 chip suppliers in 2017: Intel knocked from top spot after 22 years

By Nick Flaherty www.flaherty.co.uk

Intel has been knocked from the top spot as largest chip supplier after 22 years as undersupply in the memory business grips the industry. However this will almost certainly be temporary as new capacity comes on-stream and we get oversupply in the classic semiconductor cycle.

What it does do is give the new #1, Samsung, more cash for developing 10nm and 7nm process technology and capacity.  

Samsung grew a phenomenal 52% over the year as worldwide semiconductor revenues reached $419.7 billion in 2017, a 22.2 per cent increase from 2016, according to preliminary results by Gartner. The undersupply helped drive 64 per cent revenue growth in the memory market, which accounted for 31 per cent of total semiconductor revenue in 2017.

"The largest memory supplier, Samsung Electronics, gained the most market share and took the No. 1 position from Intel — the first time Intel has been toppled since 1992," said Andrew Norwood, research vice president at Gartner. "Memory accounted for more than two-thirds of all semiconductor revenue growth in 2017, and became the largest semiconductor category."

The key driver behind the booming memory revenue was higher prices due to a supply shortage. NAND flash prices increased year over year for the first time ever, up 17 per cent, while DRAM prices rose 44 per cent.

Equipment companies could not absorb these price increases so passed them onto consumers, making everything from PCs to smartphones more expensive in 2017.

Other major memory vendors, including SK Hynix and Micron Technology, also performed strongly in 2017 and rose in the rankings (see Table 1).

Table 1. Top 10 Semiconductor Vendors by Revenue, Worldwide, 2017 (Millions of US Dollars)
2017 Rank
2016 Rank
Vendor
2017 Revenue
2017 Market Share (%)
2016 Revenue
2016-2017 Growth (%)
1
2
Samsung Electronics
61,215
14.6
40,104
52.6
2
1
Intel
57,712
13.8
54,091
6.7
3
4
SK Hynix
26,309
6.3
14,700
79.0
4
6
Micron Technology
23,062
5.5
12,950
78.1
5
3
Qualcomm
17,063
4.1
15,415
10.7
6
5
Broadcom
15,490
3.7
13,223
17.1
7
7
Texas Instruments
13,806
3.3
11,901
16.0
8
8
Toshiba
12,813
3.1
9,918
29.2
9
17
Western Digital
9,181
2.2
4,170
120.2
10
9
NXP
8,651
2.1
9,306
-7.0
Others
174,418
41.6
157,736
10.6
Total Market
419,720
100.0
343,514
22.2
Source: Gartner (January 2018)


Second-placed Intel grew its revenue 6.7 per cent in 2017, driven by 6 per cent growth in data centre processor revenue due to demand from cloud and communications service providers. Intel’s PC processor revenue grew more slowly at 1.9 per cent, but average PC prices are on the rise again after years of decline following the market’s shift from traditional desktops toward two-in-one and ultramobile devices.

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Gartner agrees that the current rankings may not last long. "Samsung’s lead is literally built on sand, in the form of memory silicon," said Norwood. "Memory pricing will weaken in 2018, initially for NAND flash and then DRAM in 2019 as China increases its memory production capacity. We then expect Samsung to lose a lot of the revenue gains it has made."

The rankings will change significantly over 2018.  Qualcomm’s acquisition of NXP was one big deal that was expected to close in 2017, but did not. Qualcomm still plans to complete the deal in 2018, but this has now been complicated by Broadcom’s attempted takeover of Qualcomm. Toshiba has also divested its memory business to Western Digital, which will alter five of the slots in the rankings.

"The combined revenues of Broadcom, Qualcomm and NXP were $41.2 billion in 2017 — a total beaten only by Samsung and Intel," said Norwood. "If Broadcom can finalise this double acquisition and Samsung’s memory revenue falls as forecast, then Samsung could slip to third place during the next memory downturn in 2019."

Market Share Analysis: Semiconductor Revenue, Worldwide, Preliminary 2017 Estimates


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