Foundries, fabless suffer in 2018 ranking

November 13, 2018 //By Peter Clarke
Foundries, fabless suffer in 2018 ranking
Jerry Sanders' famous, if politically incorrect, quote: "real men have fabs," could be coming back to haunt an industry that is coming to the end of Moore's Law and where control of semiconductor manufacturing is again becoming a differentiating feature.

That is, if we judge from the performances of fabbed, fabless and foundry vendors of semiconductor chips in the latest ranking from IC Insights. If we modify the quote to make it gender inclusive it could be said that in 2018 – with only one or two exceptions – real executives have fabs.

In 2018 the fastest growing chip companies will include fabbed companies Samsung, SK Hynix, Micron with estimated annual growth of 26, 41 and 33 percent, respectively. The worst performing companies are each side of the foundry-fabless partnership; TSMC, Broadcom and Qualcomm, with growth of 6, 4 and minus 3 percent respectively.

Top 15 semiconductor companies by forecast 2018 sales ($M, including foundries). Source: IC Insiights.

The fabbed companies are benefitting from strong demand and selling prices for DRAM and NAND flash memory, although that cycle appears to be coming to an end in 4Q18.

This is illustrated by IC Insights analysis of Samsung's performance. Memory devices are forecast to represent 84 percent of Samsung’s semiconductor sales in 2018, up three points from 81 percent in 2017 and up 10 points from 71 percent in 2016.  The company’s non-memory sales in 2018 are expected to be only $13.3 billion, up 6 percent from 2017’s non-memory sales level of $12.5 billion. In contrast, Samsung’s memory sales are forecast to be up 31 percent this year and reach $70.0 billion.

One exception to the "real executives" rule is fabless Nvidia Corp., which is expected to increase revenue by 37 percent driven by its success selling GPUs into machine learning applications within data centers.

Similarly some fabbed companies are not expected to perform that well. Texas Instruments with growth of just 8 percent and image sensor provider Sony down at 2 percent.

Next: Middle-ranking characteristics

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