Semiconductor Revenue Growth, Ranking

Worldwide semiconductor revenue declined 1.9% in 2015 (see article below) while fab capacity increased 6% .  Samsung and Hynix benefited from the iPhone 6s demand. 

The ranking will change in 2016 due to recent trouble of Toshiba and Western Digital buying SanDisk . As in past ranking SanDisk revenue is not included, which make this table inaccurate (see April 2012 blog Top 25 2011 Semiconductor Sales Ranking )

Ron
Insightful, timely, and accurate semiconductor consulting.
Semiconductor information and news at - http://www.maltiel-consulting.com/

Gartner Says Worldwide Semiconductor Revenue Declined 1.9 Percent in 2015

Mixed Results in All Segments Drove Slow Growth

Worldwide semiconductor revenue totaled $333.7 billion in 2015, a 1.9 percent decrease from 2014 revenue of $340.3 billion, according to preliminary results by Gartner, Inc. The top 25 semiconductor vendors' combined revenue increased 0.2 percent, which was more than the overall industry's growth. The top 25 vendors accounted for 73.2 percent of total market revenue, up from 71.7 percent in 2014.

"Weakened demand for key electronic equipment, the continuing impact of the strong dollar in some regions and elevated inventory are to blame for the decline in the market in 2015," said Sergis Mushell, research director at Gartner. "In contrast to 2014, which saw revenue growth in all key device categories, 2015 saw mixed performance with optoelectronics, nonoptical sensors, analog and ASIC all reporting revenue growth while the rest of the market saw declines. Strongest growth was from the ASIC segment with growth of 2.4 percent due to demand from Apple, followed by analog and nonoptical sensors with 1.9 percent and 1.6 percent growth, respectively. Memory, the most volatile segment of the semiconductor industry, saw revenue decline by 0.6 percent, with DRAM experiencing negative growth and NAND flash experiencing growth."

Intel recorded a 1.2 percent revenue decline, due to falls in PC shipments (see Table 1). However, it retained the No. 1 market share position for the 24th year in a row with 15.5 percent market share. Samsung's memory business helped drive growth of 11.8 percent in 2015, and the company maintained the No. 2 spot with 11.6 percent market share.

Rank 2014	Rank 2015	Vendor	2014 Revenue	2015 Estimated Revenue	2014-2015 Growth (%)	2015 Market Share (%)
1	1	Intel	52,331	51,709	-1.2	15.5
2	2	Samsung Electronics	34,742	38,855	11.8	11.6
5	3	SK Hynix	15,997	16,494	3.1	4.9
3	4	Qualcomm	19,291	15,936	-17.4	4.8
4	5	Micron Technology	16,278	14,448	-11.2	4.3
6	6	Texas Instruments	11,538	11,533	0.0	3.5
7	7	Toshiba	10,665	9,622	-9.8	2.9
8	8	Broadcom	8,428	8,419	-0.1	2.5
9	9	STMicroelectronics	7,376	6,890	-6.6	2.1
12	10	Infineon Technologies	5,693	6,630	16.5	2.0
		Others	157,992	153,182	-3.0	41.2
		Total	340,331	333,718	-1.9	100

"The rise of the U.S. dollar against a number of different currencies significantly impacted the total semiconductor market in 2015," said Mr. Mushell. "End equipment demand was weakened in regions where the local currency depreciated against the dollar. For example in the eurozone, the sales prices of mobile phones or PCs increased in local currency, as many of the components are priced in U.S. dollars. This resulted in buyers either delaying purchases or buying cheaper substitute products, resulting in lower semiconductor sales. Additionally, Gartner's semiconductor revenue statistics are based on U.S. dollars; thus, sharp depreciation of the Japanese yen shrinks the revenue and the market share of the Japanese semiconductor vendors when measured in U.S. dollars."

The NAND market continued to deteriorate throughout the year. As a result, revenue grew only 4.1 percent in 2015, fueled by elevated supply bit growth that resulted in an aggressive pricing environment. The tumultuous NAND pricing environment rippled through most of the NAND solutions, particularly solid-state drives (SSDs), which continue to encroach on hard-disk drives (HDDs). The ensuing price war in SSDs further pressured the profitability of the NAND flash makers amid the biggest technology transition in flash history — 3D NAND. While 3D NAND commercialization was modest, it was limited to only one vendor — Samsung. Modest revenue gains have not stopped investment in NAND flash and 3D technology, with all vendors continuing to spend aggressively in the technology and most with new fabs.

After 32.0 percent revenue growth in 2014, the DRAM market hit a downturn in 2015. An oversupply in the commodity portion of the market caused by weak PC demand led to severe declines in average selling prices (ASPs), and revenue contracted by 2.4 percent compared with 2014. The oversupply and the extent of ASP declines could have been significantly worse if Micron Technologies' bit growth had performed in line with its South Korean rivals. Fortunately for the market, the company saw negative bit growth due to its transition to 20 nm, sparing the industry from an even more severe downturn.

Additional information is provided in the Gartner report "Market Share Analysis: Semiconductors, Worldwide, Preliminary 2015 Estimates."

China Increasing IC Power

China is flexing its muscles and is increasing its stakes in semiconductor manufacturing. It has made life difficult for Qualcomm in recent negotiations (see the article below).  

China's state-owned Tsinghua Unigroup tried to buy Micron in July 2015 ( proposed purchase of Micron shows China wants to either co-opt or buy foreign chipmakers ). In September China's Tsinghua to buy Western Digital stake . Interestingly, in October 2015 Western Digital to buy SanDisk in $19 billion deal . All these deals end up giving China's Tsinghua a stake in SanDisk. 

Considering the fact that Chinese factories are using over 60 percent of the world's chips annually, it is not surprising that they are attempting to climb up the design value chain.

Ron
Insightful, timely, and accurate semiconductor consulting.
Semiconductor information and news at - http://www.maltiel-consulting.com/

China chips away at U.S., Taiwan semiconductor dominance

China's multi-billion dollar drive towards self-reliance in semiconductors has spawned a cluster of chip designers that industry experts say could eventually rival leaders Qualcomm Inc (QCOM.O) and MediaTek Inc (2454.TW).

The world's second-largest economy now boasts nine companies that design and sell chips in the global top 50 from just one in 2009. Clients such as Chinese smartphone manufacturers have also helped compatriot chip designers amass a market share of almost a fifth, according to data analyst TrendForce.

The rise of Chinese designers such as Huawei Technologies Co Ltd [HWT.UL] subsidiary HiSilicon and Spreadtrum Communications comes as the government ploughs funds into home-grown technology to reduce cyber-security risk, following revelations in 2013 of U.S. global cyber-snooping programs.

The revelations have made China a harder place for U.S. tech firms to do business, with Qualcomm saying as recently as last month that it faced delays closing licensing agreements. In contrast, sales at Chinese designers are set to surge this year, some by as much as 40 percent, said researcher IC Insights.

"The Chinese fabless industry is expanding by leaps and bounds," said Bernstein analyst Mark Li, referring to designers which contract out fabrication to so-called foundries such as Taiwan Semiconductor Manufacturing Co Ltd (TSMC) (2330.TW).

Chinese chip designers lag top rivals in terms of technology by four to five years yet have the potential to disrupt the global chip supply chain, industry experts and executives said.

But in terms of size, China is likely to seize second place in the $20 billion-plus chip design industry from Taiwan this year, Li said.

PAST MISTAKES

Chinese factories use over 60 percent of the world's chips annually, and in 2013 imported more chips by value than crude oil. To promote domestic development, the government has tasked chip firms with raising revenue by more than 20 percent annually and building "a group of world-class companies" by 2030.

China's list of chip design hopefuls include HiSilicon plus Spreadtrum and RDA Microelectronics Inc - both controlled by state-backed Tsinghua Unigroup Ltd - as well as All Winner Technology Co Ltd (300458.SZ), Leadcore Technology, Galaxycore Microelectronics and Goodix Technology.

"Only by being a market leader can you be profitable," said Tsinghua Unigroup Chairman Zhao Weiguo.

Through a $21.7 billion national fund, as well as at least five other government-led investment vehicles in cities such as Beijing, Shanghai and Nanjing, China has approximately $32 billion under management to build national champions in the chip ecosystem, according to consulting McKinsey & Co.

"Their IC design can become a strong force in a few years," TSMC co-Chief Executive Officer Mark Liu said in a recent interview, referring to chips as integrated circuits (IC).

"However, the system has to reward innovation. You cannot just want market share and dump a lot of low price products into the market. That is not going to help the Chinese IC design sector to grow," Liu said. "So there are good parts and I hope they avoid the bad parts."

There is concern in the industry about a repeat of China's previous efforts to develop industries, such as solar panels and liquid crystal displays (LCD), where overzealous investment led to oversupply and plunging prices.

China made up 14 percent of the global LCD market last year from 3 percent in 2010, while the industry's average profit margin declined to 1.2 percent from 7.8 percent over the same period, wrote Bernstein's Li in a recent report.

"China will not stop until it dominates the market, with value and economics being destroyed every single time," said Li.

(Reporting by Yimou Lee, Miyoung Kim, J.R. Wu; Additional reporting by Paul Carsten; Editing by Christopher Cushing)