In this article, we discuss the 12 largest chip producers in the world. If you want to skip our detailed analysis of the chip manufacturing industry, its history, performance, and outlook for future growth, go directly to 5 Largest Chip Producers In The World.
For a basic understanding of what a semiconductor is, let us consider a tiny circuit comprised of transistors and wiring set up on a small silicon wafer (sheet). The basic purpose of this circuit made on silicon, a half conductor, half insulator, is to alter the flow of electric current passing through it and thereby provide binary signals that devices can use to process data.
At the very minimal level, this is the contraption used to power a smart LED bulb in your house, and in its most sophisticated form, this technology enables autonomous driving vehicles and computers with processing powers unimagined a few decades ago. Thus it is no wonder that this industry is often referred to as the new ‘oil’, given its critical importance in sustaining the infrastructure of every sector of the global economy. Drones, smart tractors in agricultural fields, data centers that process millions of gigabytes of data, and the latest smartphone in your palm; all these devices use semiconductor chips as their ‘brains’.
As the pandemic changed population behaviors and led to a broader shift towards digital mediums for work and play, a surge in demand for smart devices led to a shortage of semiconductor chips, which was especially exacerbated by the supply chains already being disrupted due to the lockdowns. This affected product deliveries for smartphones, automobiles, and a range of electronics industries. JP Morgan analyst Gokul Hariharan expects this shortage to linger on until at least mid-2022, after which he sees supplies becoming more readily available. Some analysts fear the crunch may persist until 2023.
Regardless of when supplies once again meet demand, the semiconductor industry is reaching new heights. According to Fortune Business Insights, the global semiconductor market is forecasted to grow from $452.25 billion in 2021 to $803.15 billion in 2028, at a CAGR (compound annual growth rate) of 8.6%. The industry grew 21% in 2021 despite being fraught with supply issues, and according to IC Insights, will expand by 23% in 2022, with total semiconductor sales expected to increase 11% and reach a record valuation of more than $680 billion. Another report by IC Insights, an expert in semiconductor market analysis, states that the top 25 companies in the chip-making business saw revenues climb significantly in 2021, with Advanced Micro Devices, Inc. (NASDAQ:AMD) growing its sales by 65%, and NVIDIA Corporation (NASDAQ:NVDA) by 54% during the year.
Governments around the world recognize the significance of the semiconductor industry in protecting and advancing their national economic interests. The US House of Representatives passed the America Competes Act in February, which aims to set aside $52 billion to boost the semiconductor industry in the United States. This is part of America’s plan to become self-reliant in the critical semiconductor industry and reassert itself over economic rival China. In March, Reuters reported that the CEOs of Intel Corporation (NASDAQ:INTC) and Micron Technology, Inc. (NASDAQ:MU) will testify before the U.S. Senate Commerce Committee to make a case for $52 billion in government subsidies for chip manufacturing in the United States.
Spending by semiconductor firms has also seen a significant uptick in recent years as they aim to boost production. Intel Corporation (NASDAQ:INTC) plans to spend €80 billion in the European Union over the next ten years to boost its manufacturing footprint and create a resilient and diversified chip ecosystem on the continent. It will also spend €17 billion towards the construction of a semiconductor fab mega-site in Germany, where production is expected to start by 2027. The world’s largest semiconductor foundry, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), plans to spend $40-$44 billion in capital expenditures in 2022, as compared to roughly $30 billion in 2021.
Advances in technologies such as 5G, artificial intelligence, cloud computing, autonomous vehicles and smartphones will rely on the power, stability and growth of the global semiconductor industry. Therefore, it would be wise to know which companies are among the biggest names in the game. Let’s now take a look at our list of the top 12 semiconductor companies in the world.
jonas-svidras-e28-krnIVmo-unsplash
Our Methodology
We chose the biggest semiconductor firms in the world based on their market capitalization, after a detailed study of the global semiconductor industry. We mentioned the company’s products, future plans and market standing, as well as revenue figures for 2021.
12 Largest Chip Producers In The World
12. STMicroelectronics N.V. (NYSE:STM)
Number of Hedge Fund Holders: 15
Market Cap: $39.07 billion
STMicroelectronics N.V. (NYSE:STM) is a Swiss company which manufactures semiconductor integrated circuits and discrete devices used by a range of industries around the world including computing, telecommunications, industrial, and consumer electronics. The company’s revenue for 2021 stood at $12.76 billion, an increase of 24.88% from 2020.
STMicroelectronics N.V. (NYSE:STM) announced on March 9 that it has released new radiation-hardened ICs (integrated circuits) in low-cost plastic packages that would provide important functions for the electronic circuitry in low-cost satellites, which will be used to deliver services such as earth observation and transmission of broadband internet from low-Earth orbits.
On February 28, the firm announced that it was introducing the third generation of MEMS sensors, which will enable the next upgrade in performance and features for smartphones, and across a range of industries, including healthcare and retail. These sensors by STMicroelectronics N.V. (NYSE:STM) can provide the highest accuracy for product features including activity detection, indoor navigation, and precision industrial sensing.
On February 17, Credit Suisse analyst Adithya Metuku maintained an ‘Outperform’ rating on STMicroelectronics N.V. (NYSE:STM) shares, and bumped the price target on them to €65 from €60.
Of the hedge funds tracked by Insider Monkey, Renaissance Technologies was a leading shareholder of STMicroelectronics N.V. (NYSE:STM) in the fourth quarter, having increased its stake by 394% over the previous quarter, to give it 1.53 million shares valued at $75.78 million.
In addition to NVIDIA Corporation (NASDAQ:NVDA), Intel Corporation (NASDAQ:INTC) and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM); STMicroelectronics N.V. (NYSE:STM) is a top semiconductor company.
11. NXP Semiconductors N.V. (NASDAQ:NXPI)
Number of Hedge Fund Holders: 44
Market Cap: $49.29 billion
NXP Semiconductors N.V. (NASDAQ:NXPI) is a Dutch provider of semiconductor technology such as microcontrollers, application processors, gyroscopic sensors, and more. These products are used in car infotainment systems, smartphones and security applications. NXP Semiconductors N.V. (NASDAQ:NXPI) provides its automotive radar technology to top automobile firms around the world, and the company can benefit as more cars around the world adapt ADAS (Advanced Driver Assistance Systems).
The Dutch firm co-invented near field communication (NFC) technology in collaboration with Sony and Inside Secure, and its NFC chips are used in many devices to enable contactless payments. NXP Semiconductors N.V. (NASDAQ:NXPI) also provides chip sets for use in electronic passports and RFID tags and labels, as well as technology for its MIFARE brand, which is currently deployed by several major public transit systems around the globe for automated fare collection.
NXP Semiconductors N.V. (NASDAQ:NXPI) posted annual revenue of $11.06 billion for 2021, which was up 28.46% year-on-year. The firm generates almost half of its revenue from automotive chip sales, and could have a strong 2022 on the back of an expected improvement in car sales this year.
On February 2, Truist analyst William Stein kept a ‘Buy’ rating on NXP Semiconductors N.V. (NASDAQ:NXPI) shares, and increased the price target on them to $265 from $250. The analyst noted that the firm posted a “nearly perfect quarter”, and that it also raised its dividend and share buyback program significantly.
Fisher Asset Management held roughly 898,000 shares worth $204.5 million in NXP Semiconductors N.V. (NASDAQ:NXPI) during the fourth quarter, making it the top shareholder of the firm.
Here is what ClearBridge Investments had to say about NXP Semiconductors N.V. (NASDAQ:NXPI) in its Q3 2021 investor letter:
“Over the last year, we have sought to improve the up capture of the portfolio by expanding exposure to the select bucket of companies growing revenues and earnings at meaningfully above-average rates and targeting large total addressable markets. Newer names in the select bucket like NXP Semiconductors have been strong contributors to relative performance over this period. We believe that owning a broader group of IT and Internet companies with different drivers to the businesses helps manage some of the risk in this relatively more expensive subsector.”
10. Lam Research Corporation (NASDAQ:LRCX)
Number of Hedge Fund Holders: 62
Market Cap: $76.27 billion
Lam Research Corporation (NASDAQ:LRCX) is a California-based firm which offers semiconductor processing equipment used in the fabrication of integrated circuits. As the global demand for semiconductor chips and microcontrollers goes up and firms invest billions in chip-making plants, companies such as Lam Research Corporation (NASDAQ:LRCX) that make semiconductor manufacturing equipment are set to enjoy steady growth. Even though the particular dynamics of the company’s offerings call for heavy investments into R&D to keep up with the times, Lam Research Corporation (NASDAQ:LRCX) is one of the frontrunners in its segment, which has high barriers to entry, giving the company a dominant position that it seeks to maintain.
Some of the most prominent semiconductor manufacturers around the world, such as Micron Technology, Inc. (NASDAQ:MU), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Samsung, are clients of Lam Research Corporation (NASDAQ:LRCX), with each firm accounting for more than 10% of Lam Research’s revenues.
In January, Berenberg analyst Tammy Qiu maintained a ‘Buy’ rating on Lam Research Corporation (NASDAQ:LRCX) and noted that all mainstream semiconductor chip manufacturers are spreading out their spending over the next several years due to the increasing level of complexity in chip design. Qiu thinks that the multi-year roadmap for the segment shows that spending will remain high in the coming years, and sees the semiconductor shortage gradually resolving by the end of 2022. Citi analyst Atif Malik added Lam Research Corporation (NASDAQ:LRCX) to the firm’s US Focus List on March 18 and maintained a ‘Buy’ rating on the company’s shares with a $750 price target. Malik noted that the firm has outsized memory sales exposure relative to its U.S peers and that shares are down 28% year-to-date, presenting a good entry point.
Billionaire Ken Fisher’s Fisher Asset Management was the top shareholder of Lam Research Corporation (NASDAQ:LRCX) in the fourth quarter, with 1.8 million shares valued at $1.29 billion. The fund recently increased its holding in the company by 4%.
9. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 83
Market Cap: $88.60 billion
Micron Technology, Inc. (NASDAQ:MU) is a semiconductor firm specializing in memory products and storage solutions. The firm is a leader in DRAM products, which are dynamic random access memory semiconductor devices with low latency that provide high-speed data retrieval; and NAND products which are non-volatile and re-writeable semiconductor storage devices. As the world adapts 5G technology, Micron Technology, Inc. (NASDAQ:MU) is expected to benefit greatly as smartphones with 5G capability have 50% higher DRAM and twice the NAND capability as compared to 4G smartphones. Products by the firm are also used in the automotive sector, the server and communications field, and in consumer electronics and computers around the world.
In March, Micron Technology, Inc. (NASDAQ:MU) partnered with Idaho Power to construct a 40-megawatt solar power project in Boise, Idaho near its corporate headquarters. This project is part of Micron’s sustainability and green energy goals, and will put the firm on the path towards using 100% renewable energy for its U.S operations by 2025.
Fitch Ratings upgraded Micron Technology, Inc. (NASDAQ:MU) to “BBB” from “BBB-” in early March, a stable rating outlook. The ratings agency noted that current supply shortages for non-memory components are amplifying strong secular demand for memory and storage, driven by increasing content across a well-diversified set of end markets. Fitch believes that Micron’s $1-2 billion of predicted average annual free cash flow provides the firm ample room to increase its investments as part of its commitment to maintaining technology leadership in the semiconductor space.
On March 1, Micron Technology, Inc. (NASDAQ:MU) announced it was sampling the world’s first vertically-integrated 176-layer NAND solid-state drive for data centers. The Micron 7450 SSD is able to meet the most demanding requirements of data center workloads with its NVMeTM, which delivers quality-of-service latency at or below 2 milliseconds, a wide capacity range and the broadest set of form factors available. This will allow Micron Technology, Inc. (NASDAQ:MU) to respond to customers’ evolving needs in the market, and support strengthened device security.
Hazelton Capital Partners, an investment firm, talked about Micron Technology, Inc. (NASDAQ:MU) in its Q3 2021 investor letter. Here’s what the fund said:
“It’s hard to explain how shares of Micron Technology, manufacture of DRAM and NAND semiconductor chips, can fall during a global chip shortage. In most industries, focusing on demand can give you a clear insight into what lays ahead for a company. Today, the memory and storage chip industry is no different. However, in the past, companies focused on market share led to the reckless build out of chip fabrication plants (FABs), oversupply, falling average selling prices (ASPs) of memory and storage chips, lower margins, and declining cash flows. As the industry consolidated – there are now just 3 major producers of DRAM and 5 on the NAND side – rational behavior among the key players began to take hold as competitors began focusing more on R&D. Currently, chip pricing remains cyclical although less so than in the past and that cyclicality has a long-term upward bias. The ongoing transition to newer and more robust platforms (3D 176-layer NAND & 1-Alpha node DRAM) has provided the memory and storage chip industry with improved supply capacity under its current manufacturing footprint, ultimately pressuring ASPs. Over the past three years, as most of the large platform conversions have already taken place, being able to add more bits per wafer has reached a saturation point. With no major FAB build outs planned in the near-term by competitors Samsung or SK Hynix, constrained supply and flattening cost curves should lead to durable and upward sloping ASPs once the recent volatility from the chip shortage subsides.
Currently Micron Technology trades at just 8x 2022 estimate earnings. MU is expecting growth in both DRAM and NAND not just from the supply of more chips to data centers, artificial intelligence, the auto sector, and mobile devices, but also from greater demand for gigabyte capacity per unit within those segments. With a healthy balance sheet, improving return on invested capital, and expanding cash flows, not only should Micron benefit from improving future earnings but its multiple should also reflect the transition to a flattening cost curve.”
8. Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 78
Market Cap: $118.55 billion
Applied Materials, Inc. (NASDAQ:AMAT) is up next on our list of the biggest semiconductor companies in the world. It is based in California, and offers equipment used to build semiconductor chip technology.
Applied Materials, Inc. (NASDAQ:AMAT) provides chip manufacturing plants with manufacturing tools and process technologies used to build high-end displays and chip products. The company provides LCD fabrication equipment to the flat panel display industry, used by smartphones and television screens. It also makes and sells solar photovoltaic (PV) manufacturing systems to the solar industry. Its clients include Intel Corporation (NASDAQ:INTC), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and Samsung, among others.
In April 2021, during its Investor Meeting, Applied Materials, Inc. (NASDAQ:AMAT) announced plans to grow its revenue, earnings and free cash flow by enabling customers to accelerate improvements in chip power and performance, as well as cost and time to market. The firm also said it plans to generate 70% of future revenue from services and parts through long-term agreements based on the subscription model.
On March 11, Applied Materials, Inc. (NASDAQ:AMAT) announced a $6 billion share repurchase authorization, which the firm said “demonstrate(s) Applied Materials’ confidence in the long-term growth of our markets, the strength of our technology, and our ability to generate strong cash flow and attractive shareholder returns.” In February, Citi analyst Atif Malik gave Applied Materials, Inc. (NASDAQ:AMAT) a ‘Buy’ rating and set a price target of $180, up from $178.
Former Vice President Al Gore’s Generation Investment Management was the top shareholder in Applied Materials, Inc. (NASDAQ:AMAT) at the end of December, with a stake comprising 4.27 million shares valued at approximately $672 million.
Here is what Davis Funds had to say about Applied Materials, Inc. (NASDAQ:AMAT) in its Q4 2021 investor letter:
“Within technology and communication services, we own a number of online businesses and semiconductor related companies, including Alphabet, Amazon, Intel, Applied Materials and Texas Instruments. Within the realm of high technology, we believe that leadership positions reflect enduring and widening competitive advantages over smaller competitors, with few exceptions. This is because online businesses, as well as semiconductor companies, benefit from economies of scale. An online search and advertising engine will, in general, be more profitable per unit of cost as it grows larger in terms of users and advertising dollars. It is a hub-and-spoke model, in other words, where it is generally not necessary to grow expenses at the same rate that revenues grow beyond a certain threshold. Therefore, returns on capital tend to be higher, the larger and more dominant the online search company is.”
7. Texas Instruments Incorporated (NASDAQ:TXN)
Number of Hedge Fund Holders: 53
Market Cap: $166.54 billion
Texas Instruments Incorporated (NASDAQ:TXN) deals in the provision of analog chips, microcontrollers, multi-core processors, and embedded processors to clients around the world. These products are used for power and consumption management in many consumer electronics such as personal computers and smartphones.
Based in Dallas, Texas Instruments Incorporated (NASDAQ:TXN) was founded in 1930 and initially operated as an oil and gas company. It later switched to working for the defense industry, also producing products for the seismic industry. The firm started working primarily in the semiconductor industry in 1958, and later sold its defense segment to Raytheon Technologies Corp (NYSE:RTX) in 1997. Texas Instruments Incorporated (NASDAQ:TXN) produced the world’s first silicon transistor in 1954, and also developed the world’s first pocket transistor radio during the same year. Its list of inventions also includes the hand-held calculator and the single-chip microcontroller. The firm currently owns tens of thousands of technological patents around the globe.
Texas Instruments Incorporated (NASDAQ:TXN) also produces chips, sensors and radars for vehicle safety systems including Advanced Driver Assistance Systems (ADAS) technology currently deployed by top automobile makers around the world.
Texas Instruments Incorporated (NASDAQ:TXN) posted revenue of $18.35 billion for 2021, an increase of 26.85% year-over-year. Of the hedge funds tracked by Insider Monkey, First Eagle Investment Management was the top shareholder of Texas Instruments Incorporated (NASDAQ:TXN), with a position consisting of 3.32 million shares worth $625.24 million.
Davis Funds, an investment firm, talked about Texas Instruments Incorporated (NASDAQ:TXN) in its Q4 2021 investor letter. Here’s what the fund said:
“Within technology and communication services, we own a number of online businesses and semiconductor related companies, including Alphabet, Amazon, Intel, Applied Materials and Texas Instruments. Within the realm of high technology, we believe that leadership positions reflect enduring and widening competitive advantages over smaller competitors, with few exceptions. This is because online businesses, as well as semiconductor companies, benefit from economies of scale. An online search and advertising engine will, in general, be more profitable per unit of cost as it grows larger in terms of users and advertising dollars. It is a hub-and-spoke model, in other words, where it is generally not necessary to grow expenses at the same rate that revenues grow beyond a certain threshold. Therefore, returns on capital tend to be higher, the larger and more dominant the online search company is.”
6. QUALCOMM, Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 75
Market Cap: $177.63 billion
QUALCOMM, Incorporated (NASDAQ:QCOM) is behind the Snapdragon chipsets found in many smartphones around the world, and its patented CDMA (code division multiple access) technology is an integral part of the global wireless communications industry, especially 4G and 5G infrastructure. The California-based firm sells semiconductors to be used in a wide range of products such as autonomous vehicles, smart watches, laptops and wi-fi technology.
QUALCOMM, Incorporated (NASDAQ:QCOM) supplies semiconductor chips to smartphone giants Samsung and Apple, as well as Huawei, Oppo, Vivo, Xiaomi, LG Electronics and Sony. Qualcomm currently supplies Apple with modem chips for all of its devices, though the company predicts it may soon provide only 20% of Apple’s requirements as the iPhone-maker looks to self-supply modem chips. Still, QUALCOMM, Incorporated (NASDAQ:QCOM) believes that even when excluding sales to Apple, its growth in smartphones will be faster than the overall market, given its relationship with high-end phone-makers such as Oppo, Xiaomi and Vivo.
On February 3, Canaccord analyst T. Michael Walkley maintained a ‘Buy’ rating on QUALCOMM, Incorporated (NASDAQ:QCOM) shares, and raised his price target on them to $250 from $225. The analyst sees the company benefiting from the increased adoption of 5G technology in smartphones, which use 50% more technological parts than 4G handsets. He also sees the firm enjoying strong growth trends in the automotive and Internet of Things (IoT) segments, and add that growth in its radio frequency (RF) business will also contribute to expanding margins and overall revenue growth.
In November 2021, QUALCOMM, Incorporated (NASDAQ:QCOM) announced its financial targets for the next several years. By 2024, the firm expects its IoT revenue to reach up to $9 billion. Automotive revenues are expected to reach $3.5 billion in the next five years and $8 billion in a decade. The firm expects its addressable market opportunity to grow from the present figure of $100 billion to $700 billion in the next ten years, as digitally connected gadgets become prevalent in all spheres of commercial and personal life.
Alkeon Capital Management has a $970 million stake in QUALCOMM, Incorporated (NASDAQ:QCOM) as of the fourth quarter, consisting of 5.3 million shares, making it the top shareholder of the firm in our database. In 2021, QUALCOMM, Incorporated (NASDAQ:QCOM) posted $36.04 billion in revenue, up 35.02% year-over-year.
Along with NVIDIA Corporation (NASDAQ:NVDA), Intel Corporation (NASDAQ:INTC) and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM); QUALCOMM, Incorporated (NASDAQ:QCOM) is one of the largest semiconductor companies in the world.
Click to continue reading and see 5 Largest Chip Producers In The World.
Suggested articles:
Disclosure. None. 12 Largest Chip Producers In The World is originally published on Insider Monkey.
