Semiconductor Leaders
The semiconductor industry is dominated by global giants, in part due to the enormous scale of the market and the costs of manufacturing integrated circuits and researching new technology. Secondary to the global market are the many domestic markets that supply local, government, and military needs.
Domestic semiconductor manufacturing varies widely in its global market share. China, for instance, accounts for 34 percent of the total global semiconductor market. This demand, however, does not mean China has the largest market share; the United States controls 45 percent of the global semiconductor market (PDF, 40 MB). These numbers have their effect on domestic semiconductor requirements, as national companies operating at a global level are well positioned to supply domestic needs.
To ensure continued domestic success and international competitiveness, domestic institutions such as the Semiconductor Industry Association and IC Insights have developed with a focus on driving new innovations in technology, advocating for government support for the industry, overcoming supply chain issues, and tracking market trends.
Top global semiconductor companies
The semiconductor industry is dominated by the US and China, and trade disputes between these two giants have repercussions for both international and domestic industries. It would be a mistake, however, to assume the two nations control the entire semiconductor market share. Many countries produce semiconductor devices.
Which companies are the global leaders in semiconductor manufacturing?
The world’s leading semiconductor manufacturers are located in the United States and the Asia-Pacific region. Four of the five global leaders are from the United States, and one is from South Korea. They are the following, in order of market share:
- Intel Corporation ($241.88 billion): A US company known for the x86 microprocessor, Intel is the largest global semiconductor manufacturer based on global revenue.
- Samsung Corporation ($221.6 billion): Headquartered in Seoul, South Korea, Samsung produces memory chips, semiconductor nodes, MOSFET transistors, and integrated circuits.
- NVIDIA Corporation ($152.88 billion): A US company headquartered in Santa Clara, California, NVIDIA provides graphics-processing units and system-on-a-chip semiconductor products for the computing and automotive markets, as well as mobile processors for the smartphone industry.
- Texas Instruments Incorporated ($113.83 billion): Headquartered in Dallas, Texas, Texas Instruments produces integrated circuits, analog chips, and embedded processors.
- Broadcom Inc. ($108.13 billion): Based in San Jose, California, Broadcom Inc. produces a wide range of semiconductor devices that find applications in the data center, broadband, wireless, and telecommunications industries.
Which company produces the most semiconductor devices?
While not among the ten most profitable semiconductor companies, the Taiwan Semiconductor Manufacturing Company and the United Microelectronics Company are the world’s leading manufacturers of semiconductor chips (PDF, 1 MB).
Read more about semiconductor leaders in the IRDS™ Roadmap
Semiconductor industry in America
Originating in Silicon Valley in the 1950s, the US semiconductor industry is a mature ecosystem characterized by high levels of research and development. Under the guidance of the Semiconductor Industry Association, US semiconductor companies tend to focus on design and innovation, with actual manufacturing often contracted out to offshore companies. While this has worked in the past, there are concerns the global supply chain used by domestic US companies may be disrupted by the ongoing US-China trade war.
What are the projections for the American semiconductor industry?
According to the Semiconductor Industry Association, worldwide semiconductor sales in 2019 amounted to $412.1 billion, a decrease of 12.1 percent from sales figures of 2018. This loss, due partly to supply-and-demand issues and ongoing US-China trade disputes, is expected to reverse in 2020.
The American semiconductor industry should see growth in line with global industry predictions. World Semiconductor Trade Statistics (WSTS) predicts an increase of 5.9 percent for the industry in 2020, with 2021 yielding a 6.3 percent increase.
What is driving trends in semiconductor manufacturing?
Multiple trends encourage innovation and change in semiconductor manufacturing. Perhaps the most pressing demand is the need to circumvent Moore’s Law, which, as a refresher, states that the number of transistors capable of fitting on an integrated circuit doubles every two years, while the cost of computers halves in the same time.
Moore’s Law has been a cornerstone of semiconductor innovation for decades, but its continued validity is limited. Simply put, the industry has stretched the physical limitations of silicon—the most common semiconductor material in use—about as far as it will go. Moore’s Law may no longer apply after 2025.
The expiration of Moore’s Law comes as semiconductor buyers, most notably in the fields of artificial intelligence (AI) and the Internet of Things (IoT), demand smaller and more powerful chips capable of processing more data, storing more memory, and operating on less power. This has led to the push for new technology that goes beyond Moore (More than Moore (PDF, 512 KB)) and Beyond CMOS designs.
As for trends in the consumer market, the US semiconductor industry can expect to see increased demand from the rapidly developing IoT, AI, augmented intelligence, and automotive industries—the latter due to technological advances in electric and self-driving cars. Wireless communication remains a reasonably stable market for semiconductors, although growth in this sector has declined in recent years.
A growing trend for megacorporations such as Google and Apple to develop their own proprietary semiconductor devices in-house has some industry experts concerned. This newfound independence on the part of major tech companies is still in its fledgling stages. At the same time, smaller semiconductor-manufacturing companies could find growing markets in the fields of IoT and AI, which often require niche solutions for their products.
What industries depend on semiconductors?
Increasingly, the list of industries that rely on semiconductors is getting longer. While semiconductor products are vital for computing, telecommunications, military systems, utilities, health care, and transportation, there are few industries that don’t rely on integrated circuits to some extent. Even clothing retailers need them for computers, inventory controls, Wi-Fi, electronic cash registers, and communication systems. Without semiconductors, all but the most basic of industries would come to a halt—or at least see their ability to do business severely compromised.
Read more about semiconductor leaders in the IRDS™ Roadmap
Growing demand for semiconductors
Growth in the semiconductor industry has been steadily increasing, given the global development of IoT and AI devices. Taking into account fluctuations in supply and demand and international trade squabbles, semiconductor sales see modest growth from year to year. By 2025, semiconductor sales are expected to be in excess of $655 billion, even though the overall market growth will be lower than in the past.
Why are semiconductors important to computer technology?
Semiconductor materials are not just important to computer technology—at present, they’re essential. The ability of a semiconductor material (usually silicon) to act as an insulator or conductor makes integrated circuits possible.
This ability is only partially present in pure semiconductors. By adding impurities (often rare earth metals) to pure silicon, the semiconductor can be manipulated into reliably acting as an insulator or a conductor when exposed to heat or electrical current.
All computer chips are made from semiconductor products. Advances in semiconductor manufacturing have made it possible to miniaturize transistors, resistors, relays, and other components so that thousands fit on a single-chip wafer. This allows components to take up less space while operating faster with fewer energy demands. Semiconductor miniaturization makes it possible for smartphones to have processing power far in excess of vintage computers that filled entire rooms.
What resources are essential to the American semiconductor industry?
The list of materials needed for semiconductor manufacturing is impressively long. Relatively common materials include the following:
- aluminum
- boron
- copper
- germanium
- gold
- lead
- phosphorus
- silicon
- silver
- tin
In addition, semiconductor manufacturing requires more esoteric materials such as gallium arsenide, platinum silicide, titanium silicide, and titanium tungsten. Some of the most important resources needed in the industry, however, are rare earth metals.
Often used in high-κ dielectrics and chemical-mechanical planarization (CMP) slurries, rare earth metals are a set of seventeen elements that have similar chemical properties. Examples include scandium, lanthanum, neodymium, dysprosium, and promethium.
Despite their name, rare earth metals are not especially rare: they are distributed fairly evenly over the earth’s surface. The relative lack of large rare earth deposits makes them difficult to mine and process, however. Few nations have made concerted efforts to access their rare earth resources, with the notable exception of China.
China currently mines and processes approximately 85 percent of the world’s supply of rare earth metals, including neodymium and dysprosium, used in electric vehicle motors. It would take the rest of the world decades to build the infrastructure needed to match China in terms of rare earth-metal output.
As such, China can exert influence on the price of rare earth metals or even choose to withhold them from rival nations during trade disputes. This last tactic has the American semiconductor industry concerned, given the existing trade tensions between the two countries. A moratorium on exports of rare earth metals to the US could have a serious impact on semiconductor sales. Realizing this, the US government has a stockpile of rare earth metals, and some companies are experimenting with alternative metals.
How many people are employed by the American semiconductor industry?
The semiconductor industry is a major employer within the United States. According to the Semiconductor Industry Association (PDF, 40 MB), semiconductor companies employ almost 250,000 people directly, who support more than one million additional US jobs.
Read more about semiconductor leaders in the IRDS™ Roadmap
Government and defense contracts in the semiconductor industry
Government and defense play a significant role in the revenues of the domestic semiconductor industry, whether the industry is based in the United States, China, the European Union, or elsewhere. Concerns about security vulnerabilities built into foreign chip components mean governments demand products from completely domestic semiconductor supply chains—a potential problem in an industry where a global supply chain is the norm.
Semiconductor defense contracts can be lucrative, and the market is growing. Globally, the aerospace and military market for semiconductor devices is expected to see 5.88 percent CAGR through 2025, making the sector profitable despite the vetting and bidding processes typically required of defense contractors.
What role does the semiconductor industry play in government and defense projects?
Semiconductor devices are vital for government and military projects, including communications, radar, aircraft-display screens, electronic warfare, missile-guidance systems, memory, and more. Without continuous improvement and innovation in the sector, a nation’s security can suffer.
The need for the latest semiconductor products poses a dilemma for many countries, due to the global nature of the semiconductor supply chain. In the United States, for instance, military analysts concerned with China’s growing military might point to the Asian superpower’s role in semiconductor manufacturing as a potential security risk.
With thousands of components within a single chip, it becomes possible for one nation to insert sleeper cells and kill-switch circuitry into microchips that could find their way into foreign powers’ government and military equipment. Indeed, the US’s ongoing ban on 5G products from the Chinese-owned company Huawei is due in part to long-standing concerns about espionage and intellectual property theft.
Since cutting the global supply chain would have disastrous consequences for the semiconductor industry, nations such as the US and China must instead work closely with defense contractors who are willing to ensure all components in deliverables are domestically produced. Raw materials may be imported but manufactured components represent too much of a risk.
Which American semiconductor companies work with the government and military?
Silicon Valley and the US military have ties reaching back to WWII. Over the years many semiconductor companies have acted as defense contractors. At present, key players include the following:
- Airbus Group
- Altera Corporation (an Intel subsidiary)
- BAE Systems
- General Dynamics
- Infineon Technologies
- Lockheed Martin
- Microsemi
- Northrop Grumman
- ON Semiconductor
- Raytheon
- Texas Instruments
- XILINX
How do semiconductor manufacturers compete for government and military contracts?
Semiconductor manufacturers interested in becoming US defense contractors must bid on contracts offered by the Department of Defense, which awards hundreds of billions of dollars in contracts each year. The size of the bidding company is not always an issue: the DOD regularly awards contracts to smaller firms offering niche products.
To begin the process, a semiconductor company must first obtain a Data Universal Numbering System number and register with the System for Award Management. Registration is required for all companies planning to bid on defense contracts.
Networking is as vital for defense contractors as it is for any other business enterprise. Companies should have a working knowledge of federal codes and ideally forge relations with entities who have worked for the government in the past. Collaboration between semiconductor companies and other fields within the aerospace and military sector is common.
Prior to submitting a proposal, become familiar with the military standards required by the DOD through sources such as EverySpec, government handbooks, and publications. Pay special attention to the MIL-STD-810G, the military’s standard equipment-testing procedures, as well as the marking, labeling, and identification marking standards set out in MIL-STD-129R and MIL-STD-130 (PDF, 421 KB).
Finally, the company presents its proposal and bid to the DOD. The process is complex, and due to the sensitive nature of the aerospace and military sectors, extremely vigorous. For a well-positioned semiconductor company, however, a defense contract can open doors to long-lasting partnerships with government and military interests.
Interested in learning more about semiconductor leaders? Consider reading the International Roadmap for Devices and Systems (IRDS™). The IRDS™ is a set of predictions that examine the future of the electronics, semiconductor, and computer industries over a fifteen-year horizon. It encompasses a number of critical domains and technologies, from application needs down through devices and manufacturing. Join the IRDS™ Technical Community to download the roadmap and stay informed of our latest activities.