Industry brief: Semiconductors
The resurgent semiconductor or computer chip industry is a loose oligopoly, but the leading players keep growing faster than the industry as a whole. The world leader, Intel, owns about 17% of the market by revenue, but that figure is up since last year. The #2 player, Samsung, controls about 9%. All told, the top ten companies own around 60% of the market, not overwhelming, but the signs point to increased competition as the barriers to entry, mostly the cost of keeping up, keeps growing.
Those barriers are indeed high. It is estimated that a new semiconductor manufacturing plant can cost $3 billion or more to build. Only companies that can predict major sales can afford to risk the investment. The biggest possible source of new competition will come from China, whose semiconductor grows 20% a year, and whose demand for chips to feed its burgeoning electronics industry is considerable and growing faster than anywhere else in the world.
Some estimate that China will dominate semiconductor manufacture, either through joint ventures or new companies, by the end of the century. Investment bankers like Morgan Stanley are investing many billions of dollars in Chinese chipmakers.
By dint of brilliant development and sharp marketing, Intel has grown to dominate the field. It still holds sway overall, and in terms of PC microprocessors. But Korean rival Samsung has made enormous strides over the past year, leaping growing its sales (projected) by over 50%. Samsung's specialty is memory chips, a market it now dominates. And its biggest influence is not in PCs, but rather in the rapidly growing area of mobile electronic devices (phones, PDAs, game machines, etc.), all of which has growing memory demands. It is also growing in terms of device specific chips, such as drivers for LCD displays, where it is one of the leading players.
Other big players in the market:
- Texas Instruments (US) is #3 in the world. It is the leader in DSP (digital signal processing) chips, used in cell phones, DVD players, and other devices.
- Renasas Technology, founded in 2003, is the #4 chipmaker. It is a joint venture of Japanese electronics giants Hitachi and Mitsubishi Electronics, combining those two companies' semiconductor divisions. It is the world leader in microcontroller chips, and makes a range of chips including microprocessors, memory chips, and ASICs (application-specific integrated circuits).
- Infineon Technologies is Europe's #1 chipmaker, based in Germany. It is #2 in memory chips behind Samsung.
- Japan's Toshiba Semiconductor is a major producer of all kinds of computer chips including memory, microprocessors, memory, and sensors. The company has an assembly plant in China, as well as a joint venture with China's leading semiconductor company, SMIC.
- Swiss-based STMicro is similar in size to Infineon. It is a leader in integrated circuits, and sells the chips used in most automobiles and is big in consumer electronics.
- Taiwan's TMSC is growing fast. It specializes in outsourced manufacturing for other companies, including electronics firms Philips and Motorola. It excels in improved semiconductor manufacturing techniques. It is already building a factory in China.
- Japan's NEC Electronics manufacturers a wide variety of chips, and like TMC manufacture chips for other companies as well. It is a major investor in China.
- The US's Freescale Semiconductor is a spin-off from Motorola. It makes a wide variety of chips for Motorola and for companies like Apple, Fujitsu, and Hewlett-Packard.
Semiconductor industry leaders
| Company |
2004 est. sales ($billions) |
% growth from 2003 |
| Intel |
$30 |
11% |
| Samsung |
$15.9 |
53% |
| Texas Instruments |
$10.9 |
32% |
| Renasas |
$9.5 |
19% |
| Infineon |
$9.4 |
35% |
| Toshiba |
$9.0 |
23% |
| STMicro |
$8.8 |
22% |
| TSMC |
$7.7 |
31% |
| NEC |
$6.7 |
19% |
| Freescale |
$5.6 |
22% |
Source: IC Insights
6:31:53 PM 
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