by James Montgomery, news editor
August 27, 2010 – Is Intel soon to be unseated as the world’s top semiconductor maker? The numbers say it could happen in less than four years, according to IC Insights.
Just five years ago Intel’s sales were 5× that of Samsung ($22.8B vs. $4.5B). That shrunk to about 3× by 2009 ($29.7B vs. $10.6B), as PCs (Windows98/XP, Intel Pentium III) required more memory, so DRAM prices jumped. That gap has been shrinking steadily ever since — so far in 2010 Samsung has more than halved 2009’s 52% sales gap to just 27%. And extrapolating Samsung’s 10-year (1999-2009) compound annual growth rate (CAGR) of 13.5% (assuming no memory vs. just 3.4% for Intel, those growth rates indicate the two will swap places in 2014. Samsung already has been spending more than Intel on semiconductor capex for six of the past seven years (2004-2010), the analysts note.
The key is partly in Samsung’s growth in DRAMs and flash memory, but also in nonmemory segments: microcontrollers, ASSPs (for cell phones and portable systems), CMOS image sensors, and IC foundry services. In 2009, Samsung was tops in DRAM, SRAM, and flash memory devices; #3 in MCUs (now #2 with the NEC-Renesas merger), #3 in CMOS image sensors, and a top supplier in a number of other IC devices.
While the two chip titans have largely stayed outside each other’s universe in previous years, they are increasingly moving into competitive waters. Intel’s JV with Micron, IM Flash, directly competes in NAND flash; days ago IM Flash upped the ante by sampling 64Gb 3 bits/cell 25nm NAND flash devices, which will help increase bit density. Meanwhile, Samsung has crossed into Intel’s turf by supplying ARM-based application processors that compete with Intel’s Atom chips in smartphone designs. Samsung also has pledged a $1.8B budget for its system LSI operations in 2010, which includes the foundry business, and is busy readying both 32nm and 28nm high-k/metal gate (HKMG) architectures.
IC insights gives a Samsung 2014/2015 IC throne-coup "a greater than 50% chance," assuming no big memory downturn and that Intel doesn’t expand beyond its core IC business (buying McAfee for $7.6B doesn’t count). But both companies are "widely rumored to be aggressively looking to acquire companies or IC operations," in areas ranging from wireless/RF to baseband processors to power management for cellphone handsets (insert rumors of sniffing around Infineon’s wireless business).
And don’t discount Intel’s ability to grow organically with internally-developed technology. While Samsung spends more in capex, Intel leads in R&D spending — in fact it spent more in 2006-2009 on R&D than capex (and probably will in 2010, topping $6.6B, roughly twice Samsung’s R&D spending).