A tale of 'haves vs. have-nots' and AMD

For IC Insights Inc., the top 25 IC supplier ranking in 2006 was a saga between the "haves vs. the have-nots." It showcased that six of last year's top firms saw revenue growth of better than 35 percent, while nearly one-third experienced below average growth of less than 9 percent.

Over at iSuppli, one of the banner stories was the 11 percent revenue declined endured by Intel Corp. as opposed to its archrival Advanced Micro Devices Inc. (AMD) doubling its sales due in part to its mid-year acquisition of ATI Technologies Inc.

IC Insights was the first to release its tally on March 14, with iSuppli unveiling its ranking the day after. The lists are similar, but contain notable differences. For one thing, IC Insights ranks foundries like Taiwan Semiconductor Manufacturing Co. and United Microelectronics Corp. among the top chip companies, while iSuppli excludes them. IC Insights ranked Hynix Semiconductor Inc. ahead of Renesas Technology Corp., while iSuppli said Renesas bested Hynix in 2006. IC Insights ranked AMD 13th, while iSuppli ranked AMD eighth.

IC Insights says...
The strength in the DRAM market, which increased 32 percent in 2006, spurred a surge in sales at Hynix., Qimonda AG and Elpida Memory Inc., according to IC Insights. Sony Corp., meanwhile, saw its 2006 semiconductor sales surge 37 percent thanks largely to internal transfer revenue from the company's Playstation 3 game console, the firm said.

AMD saw its chip revenue jump 44 percent due largely to a noticeable market share increase, IC Insights said. IC Insights also acknowledged AMD's purchase of ATI Technologies playing a role in the company's revenue surge. Still, AMD remains only about one-sixth the size of Intel Corp., IC Insights noted. The research firm expects AMD to move into the top 10 IC suppliers in 2007 with a full year of revenue from the former ATI business.

Broadcom Corp. saw its 2006 IC revenue increase 37 percent, according to IC Insights, which credited the company's strong presence in the networking, broadband and mobile and wireless product segments. Broadcom achieved a 31 percent annual average growth from 2001 to 2006, IC Insights noted.

Nine of the top 25 chip suppliers in 2006 are headquartered in the U.S., according to IC Insights. Eight of the top 25 are headquartered in Japan, with four in Europe and two each in Taiwan and South Korea.

Of the top 25 IC suppliers in 2006, all but Nvidia achieved sales of at least $3 billion. IC Insights noted that this threshold is roughly the same dollar amount needed to construct a 300mm wafer fab.

Intel saw its revenue decline 9 percent in 2006 but easily maintained the No. 1 overall spot, IC Insights said, achieving roughly 64 percent higher chip revenue than No. 2 supplier Samsung Electronics Co. Ltd. After growing at about twice the industry rate in 2005, Intel posted the biggest sales decline of any top-25 ranked company in 2006, IC Insights said.

Thanks to Intel's big decline in sales, the top 10 chip companies showed only a 6 percent sales increase in 2006, while the top 25 posted an 11 percent overall jump—two points above industry-average growth—IC Insights said.

NXP Semiconductors, the former chip unit of Philips Electronics, moved into the 10th position in 2006 after ranking 11th in 2005, IC Insights noted. NEC Corp. fell from 10th in 2005 to 12th in 2006, the firm noted.

Six of the eight top-25 suppliers that lost positions in the 2006 ranking were Japanese companies, according to IC Insights. The other two chip firms to slip down on the list were Micron Technology Inc. and Infineon Technologies AG.

iSuppli's take
Meanwhile, Dale Ford, iSuppli's vice president of market intelligence, saw the previous year as the "worst of times" for Intel, as the microprocessor giant saw its global semiconductor revenue slumped. "The revenue decline, which was due to Intel's bleak performance in its core PC microprocessor and flash-memory businesses, erased nearly all of the company's sales gains from its strong year in 2005. Intel's 2006 revenue of $31.5 billion was less than half a percentage point higher than its sales in 2004."

Intel's microprocessor and flash-memory businesses together accounted for 83 percent of total company revenue in 2006, iSuppli said. Intel's combined microprocessor and flash revenue in 2006 fell to its lowest level since 2003 as Intel faced rising competitive pressure in those markets, according to the firm. The revenue decline resulted in Intel's market share falling to 12.1 percent, its lowest level since before 2000, iSuppli said.

Meanwhile, for AMD, it was a different story. "For Intel's smaller U.S. rival, AMD, 2006 was the best of times as it achieved a whopping 91.6 percent increase in revenue for the year, partly due to a major acquisition, but also because of strong gains in microprocessor market share," Ford said.

AMD in 2006 gained PC microprocessor market share at Intel's expense, iSuppli said. AMD's PC microprocessor revenue rose by 35.5 percent in 2006 and its market share in that product segment increased to 16.1 percent, up 5 percentage points from 11.1 percent in 2005, iSuppli said.

Overall, global semiconductor industry revenue rose by 9.3 percent to reach $260.2 billion, up from $237.98 billion in 2005, according to iSuppli. The firm had said in December that its preliminary results indicated that the global chip market had increased by 9 percent in 2006.

iSuppli also noted 2006 was a banner year for the leading pure-play memory chip suppliers. Hynix leapt to the seventh-place position in 2006, up from 11th in 2005 as its revenue surged by an impressive 41.5 percent, iSuppli said. Hynix's memory revenue growth of $2.3 billion surpassed the $1.8 billion memory sales increase posted by memory-chip leader Samsung in 2006, according to iSuppli. Qimonda, the pure-play memory company formed from the spin-off of Infineon memory business, increased its revenue by 54.9 percent in 2006, said iSuppli.

The fastest growing memory supplier in 2006—and the quickest-expanding supplier among the world's top-25 chip sellers—was Elpida, according to iSuppli. Elpida's revenue nearly doubled in 2006, rising by 98.6 percent from 2005 and pushing the company to 19th among chip suppliers from 28th in 2005, iSuppli said. Other notable increases were posted by Taiwan's ProMos Technologies Inc., Nanya Technology Corp. and Powerchip Semiconductor Corp. as well as by U.S.-based Spansion LLC, iSuppli said.

Overall, memory IC revenue increased by 22.7 percent in 2006, iSuppli said.

Texas Instruments Inc. in 2006 achieved the strongest growth among the top-five semiconductor suppliers with a 17.3 percent increase in revenue for the year, iSuppli said. The company benefited from strong sales of baseband chips, as well as digital signal processors, according to the research firm.

Beyond AMD, Hynix, Elpida, and Spansion, three other companies among the top 25 achieved growth of more than 24 percent in 2006: Qualcomm Inc., Broadcom and Nvidia, iSuppli said.

Hynix's and AMD's ascension to the first-tier semiconductor ranks in 2006 displaced two companies that had been among the top 10 since at least the early 1990s—Infineon and NEC —iSuppli said.

-Celeste dela Torre
EE Times Asia

Additional reporting by Dylan McGrath of EE Times