Semiconductor Manufacturers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 720 semiconductor manufacturers in the US design and build a variety of semiconductor and related solid-state devices including integrated circuits, memory chips, microprocessors, diodes, transistors, and solar cells. Semiconductors are used in a wide range of products, but major categories include computers and electronic devices, machinery, appliances, transportation equipment, solar panels, and lighting equipment.

Shrinking Nodes, Fewer Labs

The number of cutting-edge semiconductor manufacturers is shrinking as fewer firms have the financial resources needed to further miniaturize semiconductors.

Rapid Technology Innovation

Semiconductor manufacturers spend significant amounts of cash on research and development to meet customer demand and stay ahead of competition.

Industry size & Structure

A typical semiconductor manufacturer operates out of a single location, employs 258 workers, and generates about $71 million annually.

    • The semiconductor manufacturing industry consists of about 720 companies which employ about 185,900 workers and generate about $51 billion annually.
    • Customer industries include manufacturers of computers and electronic devices, telecommunications equipment, machinery, appliances, transportation equipment, solar panels, and lighting equipment.
    • The industry is highly concentrated with the 20 largest firms representing 78% of industry revenue.
    • Large companies include Intel, Global Foundries, Cypress Semiconductor, IBM, and Texas Instruments.
                                  Industry Forecast
                                  Semiconductor Manufacturers Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Nov 4, 2022 - Industry Scales Back As Demand Falls
                                  • Several semiconductor manufacturers have instituted hiring freezes and layoffs, slashed capital spending plans, reduced factory output, and warned of a stark reversal in their customers’ buying habits. Mobile-phone chip maker Qualcomm said in early November that it is cutting spending in some areas and pausing hiring after giving a pessimistic outlook for its current quarter. Intel said in late October that it plans to lay off an unspecified number of employees as part of a plan to reduce costs by as much as $10 billion a year by 2025. The company also said that it will run some factories less aggressively and, while it moves forward on building plants due to come online in a few years, it will defer some of the most costly equipment spending until demand warrants them. Advanced Micro Devices said that it is being cautious about hiring given slumping demand.
                                  • The $280-billion CHIPS and Science Act, which is intended to accelerate reshoring of semiconductor manufacturing, is meeting investor resistance to capital spending by semiconductor manufacturers, according to some semiconductor industry experts. Wall Street has for decades embraced asset-light companies whose intellectual property, brands, or multimillion-user platforms offer potentially spectacular returns on minimal capital. Valuations of companies reliant on tangible assets such as factories and equipment have suffered, said Jason Thomas, chief economist at private-equity manager Carlyle Group Inc. Tangible assets, he said, aren’t “reversible—you can’t sell half a factory you don’t need,” and their value would be even more depressed in situations when the owner is most desperate to sell it. Experts also note that even if some semiconductor manufacturing is reshored, that might be of limited applicability for the wider effort to reshore manufacturing. Other companies face the same intense pressure to maximize shareholder returns, without Washington’s help.
                                  • The CHIPS and Science Act includes more than $52 billion for US chipmakers as well as tax credits for domestic factories but isn't expected to affect production in the short term. Experts note that it will take companies years to build new factories and otherwise upgrade facilities to tackle chip shortages and increase manufacturing independence. US Commerce Secretary Gina Raimondo said that the Chinese government opposes government-funded assistance for the expansion of US semiconductor manufacturing capacity because it will give the US a greater competitive advantage. Reuters reported in November 2021 that China's embassy in Washington had sent letters pressing US business executives to urge members of Congress to alter or drop specific bills that seek to enhance US competitiveness. Chinese officials warned companies that they would risk losing market share or revenue in China if the legislation becomes law, according to the text of the letter. Many experts say that the complaints from China reveal its lack of effective countermeasures, as such criticisms will not reduce US efforts to slow China’s advance in fundamental technologies including semiconductors. China relies heavily on imported technology, equipment, and materials for chip design and manufacturing, making it hard for the country to make technological breakthroughs on its own.
                                  • Some US firms such as Intel Corp and Micron Technology still make chips onshore, but the industry's center of gravity has shifted to Asia, according to the CNBC news network. The US share of semiconductor manufacturing capacity has decreased from about 37% in the 1990s to about 12% in 2022, according to the Semiconductor Industry Association.
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