Samsung widens its position over Intel, US laws force China off world’s leading chipmakers list

Samsung's chip sales for the April-June quarter reached a new quarterly high of US$20,3 billion on the strength of steady server demand. Samsung's Q2 market share increased marginally from 12.5% to 12.6% while Intel's market share dropped from 11.1% in the previous quarter to 9.4%. The Omdia report shows that Chinese chip makers have dropped out of the top 10 list of the world's largest semiconductor companies. The main factor behind this is the US bans on exporting advanced semiconductor technology and tools to China and using Chinese equipment in critical US infrastructure. By 2023, global wafer starts are expected to be 50 per cent higher than in 2020.

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Joseph P Chacko
Joseph P Chacko
Joseph P. Chacko is the publisher of Frontier India. He holds an M.B.A in International Business. Books: Author: Foxtrot to Arihant: The Story of Indian Navy's Submarine Arm; Co Author : Warring Navies - India and Pakistan. *views are Personal

Samsung Electronics Co. has increased its market share in the worldwide semiconductor sector during the second quarter, retaining its top position, writes research company Omdia.

Samsung’s chip sales for the April-June quarter reached a new quarterly high of US$20,3 billion on the strength of steady server demand, comprising 12.8% of the worldwide total of $158.1 billion. Samsung’s Q2 market share increased marginally from 12.5% to 12.6% in the previous quarter.

In the same period, Intel’s market share dropped from 11.1% in the previous quarter to 9.4%. The US chipmaker’s quarterly sales decreased by 16.6% to $14.8 billion.

For many years, Samsung and Intel have been engaged in tough competition. In 2017, Samsung overtook Intel as the world’s largest chipmaker by revenue for the first time, a position it has held for the last two years. Intel surpassed Samsung in 2019 and stayed on top until 2020, until being dethroned by Samsung again in 2018.

“This dynamic is largely driven by Intel’s problems in its own markets, particularly microprocessors, rather than head-to-head competition with Samsung, which is limited,” says Josep Bori, Research Director at GlobalData Thematics Intelligence, adding that “the underlying drivers are multiple, including macro-related, competitiveness and execution.”

Intel has substantial exposure to the consumer PC market, which had an unprecedented uptick during the Covid-19 lockout and is currently undergoing a big fall; the total PC market was down more than 10% YoY in Q2 2022. “Intel has been more affected by it than Samsung, despite the latter’s exposure to it via memory,” says Bori. 

Intel is also losing market share to AMD in the data centre, especially among big cloud service providers, who are driving the expansion of corporate servers. “This is a competitive issue and could be construed as mis-execution in product management. However, given the large cloud vendors (AWS, Azure, Google) are now exploring the use of ARM chips as well as designing their own server chips, this situation may not be interim.

This predicament was painfully seen in Intel’s Q2 2022 results, where Client Computing (CCG) declined 25% YoY, and Datacenter and AI (DCAI) dropped 16% YoY. It is difficult to keep market share with these growth rates,” adds Josep Bori.

For the three months ending in June, SK Hynix placed third with a market share of 6.8 per cent, followed by Qualcomm with 5.9 per cent, Micron with 5.2 per cent, Broadcom with 4.2 per cent, Nvidia with 3.6 per cent, and MediaTek with 3.3 per cent.

Chinese chip makers disappear from the top 10 list

The industry research and intelligence firm TrendForce wrote in June 2022 that China’s Semiconductor Manufacturing International Corp (SMIC) was placed fifth among the top 10 worldwide foundry revenue earners in the January-March quarter, with a market share of 5.6%. HuaHong Group, a significant Chinese semiconductor manufacturer, headquartered in Shanghai, was placed sixth with a 3.2% market share. Nexchip, headquartered in Hefei, Anhui province, ranked ninth with a market share of 1.4%.

But, the Omdia report shows that Chinese chip makers have dropped out of the top 10 list of the world’s largest semiconductor companies. Seven of the top 10 semiconductor businesses in the world are American.

“We believe this has been driven by both Covid-19 and the ongoing US/China trade war. With China still applying a strict zero-tolerance Covid policy, their manufacturing facilities are getting still disrupted when outbreaks lead to too many employees having to self-isolate.

“However, the main factor at the moment are the US bans on 1) exporting advanced semiconductor technology and tools to China and 2) using Chinese equipment in critical US infrastructure (e.g., Huawei, ZTE in US telecoms). Given the US dominance in semi manufacturing tools (e.g., Applied Materials, KLA, LAM) and its influence on other key vendors like EUV leader ASML, the Chinese manufacturers are finding it more difficult to scale production, especially of advanced chips,” says Bori.

New fabrication facilities and world governments step in

Looking at the whole semis value chain, the area getting the most investment at the moment is fabrication due to the geopolitical situation. 

From 2021 to 2023, the capital expenditures of the three main companies will likely approach $200 billion. Governments have increased their spending by hundreds of billions of dollars. By the end of 2023, Deloitte predicts that global wafer starts to be 50 per cent higher than in 2020. Some will occur in conventional manufacturing clusters in Taiwan and South Korea, but the majority will be in the United States, Japan, China, Singapore, Israel, and Europe, a phenomenon known as “localization” that will bring chip production closer to the subsequent stage in the supply chain.

“As a result of the US/China trade war, there is an ongoing decoupling of the global value chain, with many countries looking for manufacturing self-sufficiency. After years of underinvestment in fabrication capacity in Europe and the US, which is dominated by Taiwan, Korea, Japan and China, there is now massive investment in building fabs in these regions. There are significant public incentives now in the shape of the 52 billion dollars US CHIPS for America Act and the 43 billion Euros European Chips Act,” said Bori. 

From a product category perspective, “there is a lot of demand for anything AI related, either to support cloud workloads or autonomous vehicles or even robotics. This drives investment in digital logic, particularly special purpose logic (SPL) products, such as GPUs, DPUs and AI-accelerators. And it also drives investment in application-specific integrated circuits (ASICs) at non-semis firms such as Amazon, Google, Baidu or Tesla,” said the GlobalData analyst.


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