Samsung captures top semiconductor crown
Intel’s two-decade reign vanquished
SEOUL, South Korea — Intel’s more than two decade-long reign as the king of the semiconductor industry ended Thursday after South Korea’s Samsung Electronics elbowed the U.S. manufacturer aside to become the leading maker of computer chips.
Samsung’s semiconductor business reported $15.8 billion in revenue during the AprilJune period, a record-high for its quarterly sales. Intel reported $14.8 billion.
Samsung is also widely expected to overtake Intel in annual sales this year, with $62.6 billion in revenue expected for 2017, and $60 billion projected for Intel.
Mobile devices and data are the keys to Samsung’s ascent to industry leader. Manufacturers are packing more and more memory storage capacity into ever-smaller mobile gadgets, as increased use of mobile applications, connected devices and cloud computing services drive up demand and consequently prices for memory chips, an area dominated by Samsung.
Despite its descent to second rung, Intel continues to develop new and more-powerful chips for both the mobile and cloud-based data-service markets to stay competitive with Samsung and other semiconductor companies. It’s made major investments in new chip-making operations in Arizona, Oregon and other countries in recent years, while downsizing its global workforce to cut costs and run a leaner operation.
New Mexico, however, has been on the losing end of those changes, with no new investment in Intel’s Rio Rancho plant since 2009. The company has cut its New Mexico workforce by
two-thirds since 2013, from 3,300 employees four years ago to 1,200 now.
Intel, the dominant supplier of the processors that serve as brains for personal computers, has been the world’s largest semiconductor company by revenue since 1992 when it overtook Japan’s NEC. But Intel came late to the chip market for mobile devices, allowing Samsung and other companies to gain ground in that realm.
Samsung now dominates the memory chip market, which is growing much faster than the market for computers that rely on processing units dominated by Intel, said Chung Chang Won, a senior analyst at Nomura Securities.
“Greater use of smartphones and tablet PCs instead of computers is driving the rise of companies like Samsung,” Chung said.
Tight supplies coupled with rock-solid demand have pushed prices of memory chips higher over the past year, bringing South Korea’s memory chip makers record-wide profit margins. Both Samsung and SK Hynix are expected to report all-time high profits this year.
Amid this boom that analysts call a memory chip “super cycle,” global semiconductor revenue is forecast to jump 52 percent this year, reaching $400 billion for the first time, according to market research firm Gartner.