Samsung becomes world’s biggest chip maker

South Korea’s Samsung has overtaken US rival Intel as the world’s biggest maker of semi-conductors as sales in the sector boom, a study published by consultancy Gartner showed on Thursday.

Samsung Electronics “gained the most market share and took the number one position from Intel -— the first time Intel has been toppled since 1992,” said Gartner analyst, Andrew Norwood.

The total global market for semi-conductors grew by 22 percent to $419.7 billion (348 billion euros) in 2017, fuelled by growth in smartphones and other connected devices, Gartner calculated.

Samsung’s sales jumped by 52.6 percent to $61.2 billion, giving it a market share of 14.6 percent, the study showed.

Intel’s sales, on the other hand, grew by just 6.7 percent to $57.7 billion, or a market share of 13.8 percent.

Booming demand for memory chips was the main factor driving growth in the semi-conductors market, Gartner said.

“Memory accounted for more than two-thirds of all semiconductor revenue growth in 2017, and became the largest semiconductor category,” said analyst Norwood.

The key driver behind the booming memory revenue were higher prices due to a supply shortage, the study said.

NAND flash prices increased year-on-year for the first time ever, up 17 percent, while DRAM prices rose 44 percent.

“Equipment companies could not absorb these price increases so passed them onto consumers, making everything from PCs to smartphones more expensive in 2017.”

Gartner suggested that the global ranking could be shaken up again this year if Singapore-based Broadcom succeeds in taking over US rival Qualcomm after its unsolicited merger offer was rejected last November.

If the tie-up eventually does go ahead, Samsung would fall back to third place in terms of revenues, Gartner calculated.

“2017 was a relatively quiet year for mergers and acquisitions. Qualcomm’s acquisition of NXP was one big deal that was expected to close in 2017, but did not. Qualcomm still plans to complete the deal in 2018, but this has now been complicated by Broadcom’s attempted takeover of Qualcomm,” Gartner said.

The combined revenues of Broadcom, Qualcomm and NXP amounted to $41.2 billion in 2017.

“If Broadcom can finalise this double acquisition and Samsung’s memory revenue falls as forecast, then Samsung could slip to third place during the next memory downturn in 2019,” said Norwood.  (Agency Report)