System Chips Account for 60% of Global Semiconductor Sales
The focus of the global semiconductor industry is shifting from the memory chip segment towards non-memory, which is becoming increasingly important as Industry 4.0 develops. Experts point out that South Korea is still too dependent on the memory chip segment.
According to market research firm IC Insights, TSMC’s Q3 sales in the semiconductor sector are estimated at US$20.2 billion, up 11 percent from the previous quarter, and Samsung Electronics’ are estimated at US$18.29 billion, down 19 percent. If so, TSMC will become the world’s largest semiconductor company by beating Samsung Electronics and Intel.
Samsung Electronics’ main semiconductor products are memory chips such as DRAM and NAND flash chips, which are sold after production. In the event of deteriorating market conditions, their sales drop with a surge in inventory, which is occurring now.
In contrast, TSMC’s business revolves around manufacturing for fabless chip design companies. This foundry business is less vulnerable to market fluctuations. Non-memory chips currently account for 60 percent or so of the global semiconductor sales and this market segment consists of more diverse products, which means constant market demand. According to market research firm Omdia, the non-memory and memory segments are estimated to reach US$477.3 billion and US$220.5 billion in 2025, respectively.
South Korea’s share in the global non-memory chip market is as low as 1 percent or so and its non-memory chip segment is failing to grow. Although Samsung Electronics declared in 2019 that it would top the market in or before 2030, its share has never topped 20 percent since then. The major clients including Nvidia and Intel are expanding their collaboration with TSMC rather than Samsung Electronics and its Exynos chip is still much behind the leading products of Qualcomm and Apple.