Intel Beaten By Samsung In Semiconductor Revenues

Samsung Electronics recently emerged as the No. 1 supplier of semiconductors in the world but that position could be short-lived due to the volatile nature of the memory-chip market. According to IHS Markit Samsung outperformed Intel in 2017 based on revenue. Per the IHS report Samsung’s revenues from semiconductors grew by 53.6% year-over-year and this was also a company record.

Earlier in the year Gartner, a market research firm, reported that Intel had lost the leading position as the No. 1 supplier of semiconductors, a position which it had held since 1992. IHS also noted that it was the first time that Intel was not in the leading position in more than two decades. Both IHS and Gartner however acknowledge that the position of Samsung at the top is not secure and it is unlikely to hold it for as long as Intel did.

Temporary setback

“If you look at the rapid increase in memory pricing and the subsequent revenue increase which resulted in Samsung’s rise to the top position, the possibility exists that if a strong reversal in memory pricing were to occur … Intel could regain the top position,” saidShaun Teevens, an analyst at IHS Markit.

This is because a lot has changed and the environment is not as it was when Intel first gained dominance. For instance Samsung managed to make the gains last year based on price hikes and due to the volatile nature of the chip market it would be hard to replicate the performance with consistency year after year. According to Andrew Norwood, an analyst at Gartner, the lead Samsung is currently enjoying is built on quicksand with over two-thirds of the South Korean firm’s revenues from semiconductors were from memory silicon.

Microprocessor chips

On the other hand the biggest slice of revenues for Intel come from the microprocessors that are used in servers and personal computers. Last year the memory solutions group of Intel, which is considered non-volatile, saw revenues increase by 37% to reach a figure of $3.5 billion. The overall revenues for Intel were $62.8 billion last year.

Memory makers such as Micron Technology have argued that the price hikes are different this time and are likely to last longer. Analysts are however not convinced. According to Norwood the prices of memory are likely to weaken this year. This year NAND flash memory is going to be affected and next year will see DRAM affected as a result of China increasing the memory production capacity.

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