Big get bigger as Itel leads in semiconductor growth

Paul Boughton

Intel Corp in 2005 is expected to solidify its position as the world’s leading semiconductor supplier, posting the highest revenue growth among the top 10 chip makers for the year, according to a preliminary ranking from iSuppli Corp.

The US microprocessor giant is expected to generate semiconductor revenue of US$35.8billion in 2005, up 14.4percent from US$31.3billion in 2005, according to iSuppli. This represents nearly 6percentage points more revenue growth than the next-fastest growing company among the top-five suppliers, Texas Instruments Inc. (TI).

Based on its quarterly semiconductor market-share research of the 100 leading semiconductor suppliers, iSuppli has increased its forecast for global chip revenue in 2005 to US$237.3billion, up 4.4percent from US$227.3billion in 2004. iSuppli’s previous forecast, issued in September, called for 2.4percent growth in 2005.

Worldwide semiconductor growth exceeded expectations in the third quarter, rising by 4.5percent from the same period in 2004, and by 9.3percent from the second quarter of 2005. Based on projected company sales for the fourth quarter, iSuppli estimates that fourth-quarter revenue will grow by 5.3percent sequentially.

Along with Intel, the number-two and three chip suppliers-Samsung Electronics Co. Ltd. of Korea and US-based TI-also are expected to solidify their positions. Samsung in 2005 is projected to increase its revenue to US$17.1billion, up 8.5percent from US$15.8billion in 2004. TI is set to increase its chip sales to US$11.1billion, an 8.6percent increase from US$10.2billion in 2004.

Looking at the other leading chip suppliers, number-four-ranked Toshiba Corp. of Japan is expected to generate 7percent growth, allowing it to pass European chip makers STMicroelectronics and Infineon Technologies AG and rise back to the top five in 2005, after slipping to seventh in 2004.

Infineon has announced plans to spin-off its memory business into a separate company in 2006. Based on 2005 revenues, Infineon would be ranked number 15 if its memory revenues were excluded.

This means five companies are expected to compete for ranks eight, nine, and 10 in 2006: Philips Semiconductor, AMD, NEC Electronics, Freescale and Hynix. The difference between number eight Philips Semiconductor’s market share and 12th place Hynix Semiconductor Inc’s market share is estimated at 0.11 of a percentage point in 2005.

Based on expected revenue growth of 2.4percent in 2005, Freescale Semiconductor Inc of the United States is expected to drop out of the top 10 and end the year ranked in 11th place, just ahead of Korea’s Hynix Semiconductor Inc. With impressive growth of 18.5percent, Hynix is set to be one of only three companies in the top 25 to achieve revenue growth of more than 15percent in 2005.

IBM Microelectronics’ chip revenue is expected to rise by 30percent, enabling it to move back into the top 20, up from 21st place in 2004. nVidia Corp.’s forecasted growth of 22.8per cent will propel it to 24, up from 29th in 2004.

Seven companies among the top 25 are expected to experience revenue declines in 2005. Hardest hit will be NEC, with a 12.2percent decline; Infineon, with an 8.7percent drop; Sanyo Electric Co., with an 8.5percent decline and Renesas Technology Corp. with a 7percent decrease.

Of the 20 Japanese semiconductor makers tracked by iSuppli market share research on a quarterly basis, 12 are projected to see declining revenues in 2005.

www.isuppli.com

"