On the heels of strong earnings in the third quarter of 2017, Samsung is forecast to overtake Intel as the top semiconductor manufacturer in 2017, according to IC Insights. This will be the first time Intel has slipped in the top annual ranking since 1993.
Intel is forecast to trail Samsung by $4.6 billion in 2017, erasing a 40 percent sales lead in just over a year’s time, said IC Insights. The industry watcher attributes Samsung’s gains primarily to a rise in DRAM and NAND flash average selling prices (ASPs).
Higher DRAM ASPs have been driving quarterly revenues for leading players throughout 2017. In the first quarter, depending on the DRAM device, prices increased by 10 to 30 percent, followed by a five to 10 percent increase in the second quarter. After rising by five percent in the third quarter, contract prices for DRAMs are forecast to rise again by 10 to 20 percent in the fourth quarter.
NAND flash ASPs are expected to rise by 22 percent in 2017, according to an earlier IC Insights forecast. Average quarterly increases have ranged between three to 10 percent. Contract prices in Q4 are forecast to be flat to up by six percent, according to DRAMeXchange.
Amid tight supply and rising ASPs for memory devices, particularly DRAMs, Samsung pulled ahead of Intel in the second quarter of 2017. Driven by high server market demand, Samsung’s Q2 revenue for server DRAMs increased by 36.5 percent, compared to the prior quarter, reaching about $1.99 billion with a 44.8 percent global market share.
In the third quarter of 2017, Samsung Electronics increased its sales by 14.23 trillion Korean won (about $12.9 billion) year-on-year, reaching 62.05 trillion Korean won (about $56.5 billion). The company said strong memory demand for servers and mobile devices contributed to its performance in the quarter.
In the DRAM market, Samsung attributed its strong growth to demand for cloud services, higher density products, and differentiated products such as server DRAM (64 GB and higher) and low-power mobile DRAM.
Samsung’s NAND flash growth was attributed to the launch of new smartphones, cloud infrastructure expansion, and a focus on value-added and high-density markets such as datacenter NVMe SSD.
Looking ahead, Samsung’s semiconductor group will double its capex to $26 billion in 2017, spending the bulk of the investment on DRAM and 3D NAND production capacity expansion. The company expects its memory business to remain strong in the fourth quarter and into 2018 thanks to strong demand for servers and mobile devices.
Samsung’s global semiconductor market share is forecast to account for 15 percent of the total semiconductor market in 2017, up from 12.1 percent in 2016, according to IC Insights' latest research. In comparison, Intel’s sales are forecast to account for 13.9 percent of the total market, down from 15.6 percent in 2016.
Other big memory players, SK Hynix and Micron, also are expected to make big moves in the ranking this year driven by a surge in the DRAM and NAND flash markets. Both companies are expected to move up two positions - SK Hynix will move to the number three slot and Micron will jump to number four.
Altogether, the top 10 sales leaders are on their way to breaking another record held since 1993. The top 10 are forecast to hold a 58.5 percent share of the global semiconductor market. IC Insights said if it occurs, this will be the largest share of the market held by the top 10 since 1993.
IC Insights also predicts one new entrant to the top 10 ranking. U.S.-headquartered Nvidia, which is expected to increase sales by 44 percent this year, will replace MediaTek, whose sales are forecast to fall by 11 percent to $7.9 billion.
To make the top 10 2017 ranking, semiconductor suppliers had to reach $9.2 billion in sales. However, six of the top 10 are expected to have sales of at least $17 billion.
IC Insights expects the top 10 ranking to undergo some big changes over the next few years due to possible mergers and acquisitions. For instance, if Qualcomm and NXP’s sales were combined this year, the new entity would have sales of $26.3 billion, placing it in third position. While Qualcomm is in the process of acquiring NXP, Broadcom has entered a bid to buy Qualcomm.