Qualcomm Rides Wireless Wave to Take Third Place in Global Semiconductor Market in 2012

December 4, 2012 -- In a miserable 2012 semiconductor market that will see revenue decline at seven of the world’s Top 10 semiconductor suppliers, Qualcomm Inc. is standing out, with a double-digit increase in sales that will make it the world’s third-largest chip maker this year.

Qualcomm is set to end 2012 with a stunning 27.2 percent growth in semiconductor revenue, according to preliminary results from the IHS iSuppli Competitive Landscaping Tool (CLT) from information and analytics provider IHS (NYSE: IHS). This represents the highest rate of growth of any Top 10 or even any Top 20 semiconductor supplier, as presented in Table 1 below.

 

The nearly 30 percent increase in revenue will cause Qualcomm’s share of the market to climb by a full percentage point to 4.3 percent. More significantly, it will allow Qualcomm to rise three positions and take third place in the global semiconductor business—the first time it has reached such an elevated rank.

“This year has been terrible for most semiconductor application markets—with the sole exception of the wireless segment, which is expected to generate robust revenue growth this year,” said Dale Ford, senior director at IHS. “Consumers are continuing to buy more smartphones and media tablets, even as sales of other once-hot products like PCs and flat-panel TVs decelerate or decline. With its chips at the heart of countless cellphones, including Apple Inc.’s marquee iPhone 5, Qualcomm has discovered an oasis of growth in the desert that is the semiconductor market in 2012.”

The company’s rise in the rankings is part of long-term trend that reflects the growing importance of the wireless market in the electronics supply chain.

“In 2010, Qualcomm placed only No. 9 among global semiconductor suppliers,” Ford observed. “This six-rank ascent in two years represents the biggest increase of any major semiconductor supplier in recent history. With strong continuing growth expected in smartphone and tablet sales, Qualcomm is well positioned to benefit from the boost in wireless semiconductor revenue in the future.”

Top-20 Travails

Seven companies among the Top 20 semiconductor suppliers are expected to suffer double-digit percentage declines in revenue in 2012: Advanced Micro Devices (AMD), Freescale Semiconductor, Texas Instruments, Toshiba, STMicroelectronics, Elpida Memory and Renesas Electronics. Revenue contractions for these companies will range from 11.4 to 17.7 percent.

Some Good News for Sony

After Qualcomm, the next best performance among the Top 20 suppliers is set to be posted by Sony, which will attain 20.1 percent growth in semiconductor revenue. Sony’s performance stands in stark contrast to most other major Japanese semiconductor suppliers, whose revenue will collapse by double-digit rates in 2012.

“Sony’s strong results are due to its leading position in the image sensor market, which is expected to grow by 19 percent in 2012, with the CMOS image sensor sector of the market seeing its revenue expand by 31.8 percent. Sony’s image sensor revenue, which accounts for nearly 60 percent of its semiconductor takings, is expected to expand by 48 percent. Even more amazing, its CMOS image sensor revenues are forecast to more than double,” Ford said.

Other notable supplier performances include the following:

• MediaTek will jump back into the Top 20 in 2012 after stumbling in 2011. On the strength of its 4.9 percent growth, MediaTek is projected to make the biggest increase among the Top 20 as it moves up four positions from No. 21 to No. 17. 
• Paradoxically, Rohm will jump into the Top 20 and move up the rankings by three positions to No.19, despite seeing its revenue fall by 3.0 percent. 
• The strong performance delivered by both NXP and nVidia will enable them to move up two positions in the rankings to No. 14 and 15, respectively.
• With all the movement among the top suppliers, only one company is likely to drop out of the Top 20.  At this point, IHS projects Panasonic will slip to No. 21 following a drop in revenue of 13.0 percent. 

A Widespread Downturn

Illustrating how poor market conditions for semiconductors are in 2012, out of 157 leading semiconductor suppliers tracked by IHS on a quarterly basis, more than 59 percent are expected to suffer revenue declines in 2012.  

Furthermore, out the four major global regions, only companies headquartered in Asia-Pacific will achieve growth as a group in 2012, with an expected 2.5 percent rise. Companies headquartered in the other three regions are expected to see their collective revenues fall between 2.7 and 5.8 percent in 2012, as shown in Table 2.

M&A Drought

Major mergers and acquisitions (M&A) activity among the Top 20 companies was almost nonexistent in 2012 after a high level of action in 2011. The only major move was the Samsung Semiconductor acquisition of a 100 percent share of the Samsung LED business from Samsung Electro-Mechanics. The results of all other top companies were not meaningfully impacted by M&A activity.

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