IC Insights will release its May Update to the 2016 McClean Report later this month. This includes a discussion of the 1Q16 semiconductor industry market results, an update of the capital spending forecast by company, a review of the IC market by electronic system type and a look at the top-25 1Q16 semiconductor suppliers (the top 20 1Q16 semiconductor suppliers are covered below).
The top-20 worldwide semiconductor (IC and O S D - Optoelectronic, Sensor and Discrete) sales ranking for 1Q16 is shown in Figure 1. It includes eight suppliers headquartered in the U.S., three in Japan, three in Taiwan, three in Europe, two in South Korea and one in Singapore, a relatively broad representation of geographic regions.
The top-20 ranking includes three pure-play foundries (TSMC, GlobalFoundries and UMC) and six fabless companies. If the three pure-play foundries were excluded from the top-20 ranking, U.S.-based IDM ON Semiconductor ($817m), China-based fabless supplier HiSilicon ($810m) and Japan-based IDM Sharp ($800m) would have been ranked in the 18th, 19th and 20th positions, respectively.
IC Insights includes foundries in the top-20 semiconductor supplier ranking since it has always viewed the ranking as a top supplier list, not a marketshare ranking, and realises that in some cases the semiconductor sales are double counted. With many of our clients being vendors to the semiconductor industry (supplying equipment, chemicals, gases, etc.), excluding large IC manufacturers like the foundries would leave significant 'holes' in the list of top semiconductor suppliers. As shown in the listing, the foundries and fabless companies are identified. In the April Update to The McClean Report, marketshare rankings of IC suppliers by product type were presented and foundries were excluded from these listings.
Overall, the top-20 list shown in Figure 1 is provided as a guideline to identify which companies are the leading semiconductor suppliers, whether they are IDMs, fabless companies or foundries.
Figure 1 - Q1 2016 top 20 semiconductor sales leaders ($m, including foundries)
In total, the top-20 semiconductor companies’ sales declined by 6% in 1Q16/1Q15, one point less than the total worldwide semiconductor industry decline of 7%. Although, in total, the top-20 1Q16 semiconductor companies registered a moderate 6% drop, there were seven companies that displayed a double-digit 1Q16/1Q15 decline and three that registered a ≥25% fall (with memory giants Micron and SK Hynix posting the worst results). Half of the top-20 companies had sales of at least $2.0bn in 1Q16. As shown, it took $832m in quarterly sales just to make it into the 1Q16 top-20 semiconductor supplier list.
There was one new entrant into the top-20 ranking in 1Q16 - U.S.-based fabless supplier AMD. AMD had a particularly rough 1Q16 and saw its sales drop 19% year-over-year to $832m, which was about half the $1,589m in sales the company logged just over two years ago in 4Q13. Although AMD did not have a good 1Q16, Japan-based Sharp, the only company that fell from the top-20 ranking, faired even worse with its 1Q16/1Q15 sales plunging by 30%!
In order to allow for more useful year-over-year comparisons, acquired/merged semiconductor company sales results were combined for both 1Q15 and 1Q16, regardless of when the acquisition or merger occurred. For example, although Intel’s acquisition of Altera did not close until late December of 2015, Altera’s 1Q15 sales ($435m ) were added to Intel’s 1Q15 sales ($11,632m) to come up with the $12,067m shown in Figure 1 for Intel’s 1Q15 sales. The same method was used to calculate the 1Q15 sales for Broadcom (Avago/Broadcom), NXP (NXP/Freescale) and GlobalFoundries (GlobalFoundries/IBM).
Apple is an anomaly in the top-20 ranking with regards to major semiconductor suppliers. The company designs and uses its processors only in its own products - there are no sales of the company’s MPUs to other system makers. Apple’s custom ARM-based SoC processors had a 'sales value' of $1,390m in 1Q16, up 10% from $1,260m in 1Q15. Apple’s MPUs have been used in 13 iPhone handset designs since 2007 and a dozen iPad tablet models since 2010 as well as in iPod portable media players, smartwatches and Apple TV units. Apple’s custom processors - such as the 64-bit A9 used in iPhone 6s and 6s Plus handsets introduced in September 2015 and the new iPhone 6SE launched in March 2016 - are made by pure-play foundry TSMC and IDM foundry Samsung.
Intel remained firmly in control of the number one spot in 1Q16. In fact, it increased its lead over Samsung’s semiconductor sales from 29% in 1Q15 to 40% in 1Q16. The biggest moves in the ranking were made by the Broadcom (Avago/Broadcom) and Nvidia, each of which jumped up three positions in 1Q16 as compared to 1Q15.
As would be expected, given the possible acquisitions and mergers that could/will occur this year (e.g., Microchip/Atmel), as well as any new ones that may develop, the top-20 semiconductor ranking is likely to undergo a significant amount of upheaval over the next few years as the semiconductor industry continues along its path to maturity.