The top five chipmakers accounted for 43 percent of all semiconductor sales last year, continuing a trend of market share concentration that began at least a decade ago. What's going on here?
It should come as little surprise that with all of the consolidation that has taken place in the semiconductor industry in recent years, the industry's market share is now more heavily concentrated in the hands of a few.
According to a new report by market research firm IC Insights, the world's top five semiconductor suppliers accounted for roughly 43 percent of total chip sales in 2017, an increase of 10 percent from a decade earlier. According to the firm, the top five chip vendors last year — excluding foundries — were, in order: Samsung, Intel, SK Hynix, Micron and Broadcom.
As the heavy concentration of memory chip vendors among the top five illustrates, beyond consolidation, the amazing run of memory last year also contributed to the trend of more market share being concentrated in fewer hands. Samsung, Hynix and Micron also saw sales increases of more than 50 percent last year as the DRAM and NAND flash memory markets grew by 77 percent and 47 percent, respectively.
The memory boom will eventually end, and most market watchers expect much more moderate growth in memories this year. But IC Insights believes the continuing trend of consolidation will raise the market shares of the leading chip vendors to even higher levels.
The market share trend and the wave of mega-consolidation may may in fact both be byproducts of the same thing: the bifurcation between the haves and have-nots in the semiconductor industry.
Rob Lineback, a senior research analyst at IC Insights, told EE Times that the increase in market share among the largest chip suppliers can also be attributed to "big companies having deeper pockets and the financial resources to expand and grow as technology becomes more expensive and in areas that might be difficult for mid-sized and smaller chip companies to compete over the long haul."
According to Lineback, the market share concentration is the reversal of a trend that began in the 1980s, when the birth of the fabless-foundry model led to an increase in the number of small- and mid-sized chip firms, and a throwback to the early-industry days of the 1970s, when the top five to 10 chip makers held most of the market because they were large, vertically integrated electronics companies.
"We believe semiconductor market share became spread over more chip companies after the mid-1980s due to the success of the fabless movement and then about 20 years later we began seeing consolidation and gains by the larger companies because of the high cost of competing in many market segments and the uptick in M&A during the decade," Lineback said.
— Dylan McGrath is the editor-in-chief of EE Times.
