The top 5 semiconductor manufacturers today
May 16, 2022
Since the invention of the microchip, the semiconductor industry has been growing at a steady pace. Within three and a half decades, the market has reached a whopping value of $550B and is expected to hit $600B by 2022. The world is becoming more and more digital as we speak – the way we live is now being taken over by the devices that assist us. Smart devices, computers, tablets, wearables, smart assistants, peripherals, and more are considered part of an average person’s daily routine. Chips are getting smaller, faster, and smarter. Thus, allowing for more analog tasks to now be done digitally. Cars are slowly turning electric; commerce is turning digital, and even the human experience is quickly becoming digitized in the metaverse.
Despite all these innovations at the forefront of the 21st century, the world still faces a global chip shortage. Many hopeful experts are forecasting this shortage to extend up into 2023. Tensions in Eastern Europe and the volatile geopolitical tensions between the US and China put the extremely delicate supply chain into peril. In response to this crisis, many chip manufacturers have invested billions of dollars into expanding their capacity to relinquish dependency on certain regions alone.
In this article, let’s go through the top 5 semiconductor companies today and learn about the expansion plans each has gone through in response to the world’s demand for chips.
The Top 5 Semiconductor Companies in the World
First, let’s look at the data available. Based on Statistics and Data, we see Samsung Electronics at the top with a revenue of US$ 76 billion in 2021, just overtaking Intel with US$ 73 billion. These two giants are then followed by Taiwan Semiconductor with a revenue of US$57 billion, SK Hynix with US$36 billion, and finally, Micron Technology Inc with US$ 28 billion.
Table 1: Screenshot from Statistics and Data
#1 Samsung Electronics
This South Korean giant has been nipping at the heels of Intel for decades. In 2007, their revenue was a mere $19.6B and started to skyrocket with gains in the fiscal year 2016. Samsung surpassed Intel for the number one spot until Intel regained the top spot again in 2018. One factor contributing to their dominance in 2021 would be the number of patents filed in the U.S. for 2021. Based on the data by Harrity Patent Analytics, Samsung was granted a total of 8,517 patents in the U.S. last year, just 23 patents shy of tying with IBM. This makes Samsung #2 in the U.S. for the most patents granted in 2021.
In May of 2021, Samsung Electronics announced its plans to triple its foundry production capacity by 2026 in response to the ongoing chip shortage affecting the electronics industry. This includes expanding capacity in Pyeongtaek in south Seoul to produce 14 nm DRAM and 5-nanometer logic chips with estimated completion by the 2nd half of 2022.
By November of that same year, Samsung laid out their most significant investment in the US yet – an estimated US$17 billion semiconductor manufacturing facility to be built in Taylor, Texas. One that will help boost their production of advanced logic semiconductor solutions. This facility will tackle producing chips meant for mobile, 5G, high-performance computing, and AI applications. Groundbreaking will begin in the 2nd half of 2022 and be fully operational by 2024.
Earlier this year, Samsung Electronics also announced expanding its foundry capacity in legacy nodes, including boosted production capacity for mature products like CMOS image sensors. In response to the uptick in demand, especially during a chip shortage, Samsung aims to maintain its competitive edge.
Intel has performed remarkably well over the years, outperforming many chip makers year after year. Falling short of Samsung’s 2021 gains, Intel finished with US$73.1 billion - a 0.5% growth over their 2020 revenue performance of US$ 72.759 billion. Intel was granted only 2,835 patents in 2021 and placed sixth overall in the U.S. alone.
Intel has been investing heavily in its capacity expansions to continually address the ongoing chip shortage. In December 2021, Intel announced that they would be spending US$7.1 billion on new chip packaging facilities in Penang, Malaysia. This investment bolsters Malaysia further as a global center for the testing and assembly of semiconductors.
In January of this year, Intel announced plans to invest upwards of US$ 20 billion into the construction of two leading edge chip factories in Ohio. Construction for this project is set to begin in late 2022 and is estimated to be fully up and running by 2025. Intel CEO Pat Gelsinger also announces expansions in both Europe and the U.S. in a bid to retake the top spot in the revenue race.
Gelsinger states that “Intel’s actions will help build a more resilient supply chain and ensure reliable access to advanced semiconductors for years to come. Intel is bringing leading capability and capacity back to the United States to strengthen the global semiconductor industry. These factories will create a new epicenter for advanced chipmaking in the U.S. that will bolster Intel’s domestic lab-to-fab pipeline and strengthen Ohio’s leadership in research and high tech.”
By March 2022, Intel announced its plans for expansion in Europe with an $88 billion investment. All meant to ease the supply chain woes the market is still experiencing. Gelsinger states that this investment is part of their holistic global strategy. Their European expansion plans include a facility in Magdeburg, Germany, and two factories are expected to break ground by 2023 and be completed by 2027. Aside from this, there are also plans to allocate €12 billion for expansion in their existing site in Ireland. A new R&D hub is being designed in France, and additional investments around Ireland, Italy, Poland, and Spain for manufacturing, foundry services, and research.
Back on American soil, Intel has started its $3 billion factory expansion in Hillsboro, Oregon. This expansion adds roughly around 270,000 square feet of manufacturing floor space. In the meantime, Intel is also asking for federal subsidies to help alleviate some of the manufacturing costs through the Chip Act, a $52 million stimulus bill currently making its way through Congress.
#3 Taiwan Semiconductors
With a record high in 2021, Taiwan Semiconductors (TSMC) logs in 18.5% growth over the last fiscal year with a revenue of NT$1.59 trillion. As one of the world’s largest contract chipmakers, demand for advanced 5-nanometer processed chips soared for applications in 5G, high-performance computing devices, and automotive electronics. Taiwan Semiconductors was granted 2,807 patents in the U.S. alone, falling slightly behind Intel at #7 based on Harrity’s top 300 patents.
Although most of their holdings are still located within Taiwan, their global reach can be found in the circuitry of iPhones, Playstations, and Volkswagens. To top off their strong finish in 2021, Taiwan Semiconductors announced their plans to expand their capacity further by venturing into a $7 billion plant in Japan with Sony. This plant will produce their 22-nanometer and 28-nanometer chips while they continue to expand locally in Kaohsiung to focus more on the 7-nanometer and 28-nanometer chips. Both plans are scheduled to begin this year. There are also plans for expansion in the US. Their initial intention of going into Europe seems to have fallen through the cracks. In May of 2021, they announced their intention to invest roughly US$12 billion to build a factory in Arizona, joining their competitors Samsung and Intel in expanding manufacturing on American soil. Their first Arizona-based factory will be relatively small compared to their fabs in Taiwan, with a projected output of 20,000 wafers per month, a fifth of what their “gigafabs” in Taiwan can produce every month. Nonetheless, this is the first step for growth on North American soil and will gradually build up local competency and engineering expertise to handle their advanced processes.
Overall, TSMC hopes to continue its revenue growth by investing as much as US$44 billion to increase its capacity in 2022. With Intel seemingly looking to start competing within the same space as TSMC, it will take time for them to match the competency and expertise of TSMC without sacrificing precious margins.
Some of TSMC’s top customers, such as Apple, are in the U.S., while many of their European clientele are automakers. Their expansion plans out west will bolster their revenue gains further. Sales in the U.S. account for 67% of their revenue share, while Europe and the Middle East account for only 6%, and 17% are from the Asia-Pacific. With U.S. President Biden’s Chip Act in place, expansions in North America will not be without subsidies from the federal government.
#4 SK Hynix
The second largest memory chip maker finished the fiscal year 2021 with a revenue of US$36 billion and 40% growth compared to FY 2020, holding 6.2% of the total market. The South Korean memory chip maker offers DRAM, NAND Flash, MCP (Multi-Chip Package), other memory semiconductors, and system semiconductors such as CIS (CMOS Image Sensors).
In response to the chip shortage, SK Hynix announced its plans to expand capacity for its 8-inch wafer foundry business last year. Park Jung-ho, CEO of SK Hynix, stated during a press conference in 2021 that they intend to double its foundry capacity and pledged US$101 billion to build four next-gen chip facilities in Yongin, South Korea.
In January 2022, SK Hynix announced its plans to diversify its chip business by investing in a joint venture with two other subsidiaries of the SK group. This new company will be called SAPEON and aims to introduce a new AI chip into the market. They may also consider building a chip factory in the U.S. as their rivals Samsung Electronics have already started rolling out the construction of their US$17 billion foundry in Texas.
Aside from this joint venture within the SK group, SK Hynix is also looking to collaborate with another tech giant, Qualcomm. Both companies are looking towards the spaces of 5G, the metaverse, and smart factories.
#5 Micron Technology
Finishing not far behind SK Hynix, Micron Technology finishes at the fifth spot with a revenue of US$28.45 billion, a 29% growth versus their performance in the fiscal year 2020. This marks an upward tick after showing a decline in revenue since 2019. From Harrity’s data, Micron Technology was granted 1,798 patents in the U.S. for 2021, landing them at #18 overall, 17% higher than the patents granted in 2020.
In supporting Biden’s push to encourage more chip factories to be set up within North America, Micron Technology joins other chip makers who have already committed to expanding in the U.S. This American chip memory maker announced in October of 2021 that they planned to earmark more than US$150 billion in investments over the next decade to help boost their expansions. CEO Sanjay Mehrotra says these plans include expanding existing facilities and building new ones. The economic incentives, Mehrotra says, could help compensate for the higher U.S. manufacturing costs for chips citing a 35% to 45% difference from lower cost markets elsewhere.
Mehrotra states that the shortage is easing up with indications showing some improvement, but some components may still be in tight supply come 2023. Currently, the Idaho-based memory maker has two manufacturing locations in Boise, Idaho, and the second in Manassas, Virginia. Reports say that management is considering either Texas or Arizona for their expansion plans.
How is the US responding to this?
When the chip shortage struck, many industries were severely affected. If anything, it showed the world’s dependencies on certain countries for the technologies that run our daily lives.
Before the pandemic, many American manufacturers complained of difficulties sourcing semiconductor components amidst rising demand due to electric vehicles and 5G rollouts. Along with the geopolitical tensions between the U.S. and China, the chip shortages brought about by COVID-19 were further exacerbated. The CHIPS Act authorizes several programs to expand U.S. semiconductor fabrication capacity, and support continued research and development of advanced chips. Through the CHIPS Act, chip manufacturers will enjoy incentives to expand on American soil.
Many top semiconductor manufacturers have already committed to this endeavor, including foreign chip makers like Samsung, TSMC, and SK Hynix, to bring their capacities to North America. Just announced last March 2022, the U.S. Senate approved the bill to provide US$52 billion in subsidies meant for semiconductor chip manufacturers.
So far, these top chip makers seem optimistic about the shortage easing up, and capacity improvements are seen down the line. The world’s dependence on China’s manufacturing will soon be alleviated as manufacturers diversify further while maintaining a competitive financial stance. At this point, the world is simply waiting for the highly delicate semiconductor supply chain to stabilize and, once again, fulfill consumer demand for chips.
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