Semiconductor & Other Electronic Component Manufacturing
Companies in this industry make semiconductors (computer chips) and other components used in electronic devices. Major companies include Broadcom, Intel, Micron Technology, and Qualcomm (all based in the US), along with Samsung Electronics and SK Hynix (both of South Korea), Taiwan Semiconductor Manufacturing Company (Taiwan), and Toshiba (Japan).
Global semiconductor sales total nearly $470 billion a year, according to World Semiconductor Trade Statistics. The Asia/Pacific region accounts for about 60% of semiconductor sales, followed by the Americas (20%), Japan (10%), and Europe (10%).
The US semiconductor and electronic component manufacturing industry consists of about 3,900 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $97 billion.
The industry depends highly on demand from the computer industry and makers of telecommunications products such as cell phones, which can vary sharply from year to year. Companies can be successful producing standard parts at low cost or by producing highly specialized components. Small companies can compete effectively with large ones by producing specialized products or developing new applications. Technological expertise is extremely important. The US industry is concentrated: the 50 largest companies generate about 60% of revenue.
US makers of semiconductors and other electronic components face competition from producers in other countries; at the same time, many US producers enjoy strong international sales. About 65% of US production is exported; imports make up about 75% of the US market. The high value and low weight of electronic components makes transportation costs negligible in many cases.
Specialization - The proliferation of internet-connected device (commonly referred to as the internet of things, or IoT) has diversified the semiconductor industry. Smaller companies compete with industry leaders by addressing specialized requirements (low power consumption, durability, etc.) for specific end markets such as automotive or utilities.
Talented Engineers - Semiconductor designers are among the highest-paid electrical engineers, and companies compete to attract experienced engineers with proven track records.
Access to Capital - Companies that perform their own manufacturing and testing require large investments in equipment and facilities.
Companies to Watch:
Intel vies with fellow integrated manufacturer Samsung for top spot among semiconductor makers. The inventor and leading seller of x86 microprocessors that power the majority of personal computers, Intel offers a vast array of semiconductor products.
Nvidia is one of the largest fabless semiconductor companies. Traditionally focused on add-on boards for gaming, the company has used its expertise in graphical processing units (GPUs) to become a leader in the fields such as artificial intelligence and self-driving cars.
Taiwan Semiconductor Manufacturing Company (TSMC) is the largest pure-play foundry, accounting for more than half of the market for contract chip manufacturing.
Products, Operations & Technology
Major products include data processing electronics (computer chips), printed circuit assemblies, and components such as electronic connectors.
Sales & Marketing
Finance & Regulation
Regional & International Issues
Also includes the following chapters:
Quarterly Industry Update
Trends and Opportunities
Call Preparation Questions
Glossary of Acronyms