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 684 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 295 workers, and generates about $86 million annually.

    • The semiconductor manufacturing industry consists of about 684 companies which employ about 202,000 workers and generate about $59 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

                                  Jul 3, 2024 - Firms Decrease Prices
                                  • Semiconductor manufacturers slightly decreased their prices during the first quarter of 2024, according to the US Bureau of Labor Statistics (BLS). Semiconductor manufacturing industry employment was unchanged during the first quarter of 2024 while wages for nonsupervisory employees increased slightly, according to the BLS.
                                  • Semiconductor firms don’t have enough qualified workers to staff major new factories from Ohio to Arizona, according to Fortune. The Semiconductor Industry Association trade group estimates that the US is currently short roughly 67,000 skilled workers — or 58% of all new jobs that will be created by CHIPS Act investment by 2030 — due to a yearslong trend of outsourcing skilled chipmaking labor to Asia. Workforce is a really, really important potential bottleneck,” a Commerce Department official who agreed to an interview on the condition that they not be named told Fortune. “We have some of the world’s greatest talent in this country. But because we have dramatically reduced our footprint in semiconductor manufacturing over the past 35 years, we have lost a lot of those skills, and we need to reinvigorate that.”
                                  • Venture Capital (VC) investment in the semiconductor industry decreased in 2023 to a total of $10.3 billion from 2022's $12.8 billion and 2021’s peak of $16.1 billion, according to PitchBook. The decrease may have been part of the broader VC downturn, according to Pitchbook, but market challenges including higher interest rates, supply-demand cycles, competitive pressures, and talent shortages persist. This downturn could be mitigated by a changing policy landscape. The CHIPS Act’s primary focus is on semiconductor manufacturing funding, for example, but $11 billion allotted for R&D also includes investment funds to support startups. Furthermore, the trend toward regional supply chains poses both challenges and opportunities, particularly for smaller companies in the materials and manufacturing equipment sectors.
                                  • The US Department of Commerce announced restrictions on the sale of advanced artificial intelligence (AI) chips to China. Federal officials say that the new rules are intended to close loopholes that surfaced after restrictions on AI chip exports went into effect in 2022. The earlier restrictions banned the sale of the Nvidia H100, which is the processor of choice for US AI firms like OpenAI. Chinese companies were instead able to buy a slightly slowed-down version called the H800 or A800 that complies with US restrictions, primarily by slowing down an on-device connection speed, called an interconnect. The new rules will ban those chips as well, senior administration officials said. The restrictions could also affect chips sold by Intel and AMD. Other rules may affect the sale and export to China of semiconductor manufacturing equipment from companies such as Applied Materials, Lam and KLA. Some experts say that the restrictions cut off a big and growing market for AI semiconductors and could raise concerns that the Chinese government will retaliate economically against US firms doing business in the country.
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