With once-dominant players Intel and Qualcomm struggling in the global semiconductor market, Samsung Electronics and MediaTek are challenging the two companies for market dominance, helped by ARM. Based on the low power semiconductor design of ARM, which led mobile innovation, the two challengers are expanding their businesses to other areas like the Internet of Things (IoT) and high-performance mobile processors.
To improve its worsening profitability in recent years, Intel is reportedly considering closing its aging semiconductor production lines, such as Fab 17 in Massachusetts, and turn to consignment productions, discussing the matter with 5 or 6 customer companies. However, the prospect is unclear, since both global fabless semiconductor companies like Samsung and TSMC and also Chinese firms are competing in the foundry market.
Intel, which used to dominate the PC market, lost market dominance and begun to struggle after the appearance of Apple's iPhone and iPad, where ARM architecture-based application processors are used. ARM designed high-performance and low-power mobile chips, luring Apple, Qualcomm, and Samsung to join its camp, thereby starting to dominate the market. Intel has belatedly entered the mobile market, and struggled to regain its market share over the last three years. However, the U.S. semiconductor company posted an operating loss of US$ 4.2 billion (4.5 trillion won) last year.
ARM is wielding power in the global server market, which emerged as the industry's largest battleground, in line with a sudden rise in data centers. Intel still makes up more than 90 percent of the global server chip market with x86 processors, and ARM's partner companies only comprise 1 percent of the market. Nevertheless, Lenovo apparently intends to select ARM servers following HP and Dell, which has put Intel on edge about Lenovo's move.
The world's largest mobile chipset maker, Qualcomm, is also under attack from Samsung and firms in Chinese-speaking countries like MediaTek. In particular, MediaTek is augmenting its power in the Chinese market, based on its pan-Chinese identity. The Taiwanese firm's market share increased from 14.8 percent in the first quarter of 2013 to 24.5 percent a year later, thereby threatening Qualcomm.
To add insult to injury, as Qualcomm's Snapdragon 810 was embroiled in an overheating controversy, Samsung, one of its largest customer companies, experienced a sudden decrease in sales. As a result, Qualcomm is struggling as well.