Semiconductors: Three-way Contest In 2022, Plus Predictions For 2023 And Beyond
TSMC has topped the third quarter of 2022.
The contest for the full year's crown will be interesting too.
It is now almost certain that Intel will finish a "distant" third.
Back in 2017, Samsung broke Intel’s 24-year-old reign to lead on semiconductor revenue.
While Intel was able to overtake Samsung in 2019, the Korean giant made a comeback in 2021 to claim the crown once again. All this while Taiwan Semiconductor Manufacturing Company (TSMC) stayed in the third spot.
An analysis in Swarajya explained the difference between a pure-play foundry like TSMC and an integrated device manufacturer (IDM) like Intel or Samsung.
While TSMC's revenue comes only from contract chip manufacturing (foundry), Samsung's revenue is from both its own products (mainly memory) and foundry.
Intel, so far, has a tiny revenue from its foundry services, which may change after its acquisition of Tower Semiconductor is complete and its advanced-node foundry takes off.
In that Swarajya analysis, it was also highlighted that TSMC surpassed Intel in the second quarter of 2022 to claim the second spot in semiconductor revenue.
In addition, it was predicted that TSMC was likely to overtake even Samsung in the third quarter, creating history of a pure-play foundry occupying the top spot in semiconductor revenue.
As predicted, TSMC has topped the third quarter of 2022. The contest for the full year's crown will also be interesting. It is now almost certain that Intel will finish a "distant" third.
Intel recently updated its full year's forecast. It expects annual revenue of about $63 billion to $64 billion in 2022.
In the first three quarters, Samsung had a revenue of about $60 billion and TSMC $55 billion. TSMC is likely to keep the top spot in semiconductor revenue in fourth quarter this year, but it may not be able to score a difference in revenue big enough to knock off Samsung from the top spot for the full year. It is likely to be a close finish.
While TSMC "cut its annual investment budget by at least 10% for 2022 and struck a more cautious note than usual on upcoming demand, flagging challenges from rising inflationary costs and predicting a chip downturn next year", Samsung defies chip downturn with aggressive supply and capex plans.
Recently, SemiWiki, a forum for semiconductor professionals, presented a compilation of predictions from various analyst groups for the semiconductor industry, which was nearly $600 billion in 2021.
While all of them projected positive growth percentage for 2022, some analysts turned a negative projection for 2023, while others are yet to give their take possibly due to the current volatility.
In a prediction from September, Malcolm Penn of Future Horizons, however, also clarifies that growth will return in 2024 and that the industry will be on its way to $1 trillion in sales by 2032, a couple of years later than predicted earlier.
In other words, like many past down cycles, as shown in the chart below, the upcoming negative growth is also likely to be only temporary and cause a "local minimum" in the annual revenue chart.
For India, it is important that yes-no decisions on approving 50 per cent incentives from the central government are taken soon on the three proposals for silicon fabs sitting with India Semiconductor Mission since February this year.
This is so that foundries on Indian soil can catch a part of the upcycle expected in the middle of this decade.
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