Intel is set to reassert its top ranking in the worldwide semiconductor market, extending its dominance in the strong microprocessor and NAND flash memory sectors and leveraging its acquisition of earlier this year of Infineon Technologies' wireless chip business, according to market research firm IHS iSuppli.
In a report released Dec. 1, IHS iSuppli analysts said Intel will sell $49.7 billion worth of semiconductors in 2011, a 23 percent jump over 2010 and enough to push its market-share lead to 15.9 percent, from 13.2 percent last year. It also widens the lead over second-place Samsung Electronics, which over the past three years had been whittling away at Intel's lead. Samsung will end the year 6.5 percentage points behind Intel, a year after closing the gap to 3.9 percent.
All this comes during a difficult year for the semiconductor market, which not only was impacted by the rough global economy but also by natural disasters in Japan and Thailand that impacted supply chains around the world. Overall, the analysts expect worldwide semiconductor revenues to jump 1.9 percent.
"In a challenging year for the semiconductor market, Intel achieved success on all fronts, expanding its core microprocessor and memory businesses, while also capitalizing on a major acquisition," IHS analyst Dale Ford said in a statement. "This allowed the company to outgrow the market and expand its lead over its closest competitors, defying the impact of weak economic conditions and catastrophic natural disasters in Japan and Thailand."
Intel aggressively rolled out new microprocessor offerings, from its 2nd-Generation Core "Sandy Bridge" chips to the new Xeon E3, E5 and E7 processors. Intel showed strength in the microprocessor and the NAND flash memory sectors, both of which are expected to see revenue growth of between 15 and 20 percent, according to IHS iSuppli.
The chip maker in January also closed the $1.4 billion deal for Infineon's mobile chip business, part of Intel's larger push to expand beyond its server and PC businesses and into the mobile computing space.
Intel was one of several semiconductor vendors who leveraged acquisitions to improve their standings in the market, according to the analysts. Texas Instruments, which jumped past Toshiba to become the third-largest semiconductor vendor, was helped by its $6.5 billion purchase of National Semiconductor, with revenue expected to grow 8.4 percent in 2011. Qualcomm, which bought Atheros Communications for $3.1 billion, will see its standing in the semiconductor space go from ninth place to sixth.
Samsung stays at number-two, although its revenue will climb only 3 percent this year, IHS iSuppli analysts said. It was helped by sales of NAND flash memory-Samsung is the world's largest NAND supplier-mobile application processors and CMOS image sensors, but it also is being hamstrung by the weak DRAM market. Samsung also is the world's number-one DRAM vendor, and that market globally will see a 27 percent drop in revenues, the analysts said.
Overall, the semiconductor market will be hindered by the struggling global economy, they said. At the same time, it also was hurt by the earthquake and tsunami that hit Japan in March, and the more recent severe flooding in Thailand. Revenue worldwide will grow from $307 billion in 2010 to $312.8 billion this year, the analysts said.
"In light of the daunting economic challenges and major supply chain disruptions due to natural disasters, it is a real victory for the semiconductor market to still achieve any growth at all in 2011," Ford said.
IHS iSuppli analysts said they expect the weak economic conditions to continue into 2012, with any growth next year again being the low single-digit range. A rebound won't take place until at least 2013, they said.