The Ever-Changing Semiconductor Landscape

By some measures, the EDA market is a dynamic one. Many of our technological advances have come from startups and small companies, a list that gets refreshed as new market needs arise and as former independents get acquired or merge. The technology changes constantly to meet the needs of the semiconductor suppliers and system houses that are our customers. However, when it comes to market leadership EDA is incredibly static. The same three big companies have been at the top for more than 20 years now, we believe ever since Cadence swallowed Valid in 1991 and Synopsys moved into the third spot. Of course there has been some shuffling among Cadence, Synopsys, and Mentor, but that has happened only a few times.

This is in sharp contrast to the semiconductor business. Although Intel and Samsung have been at the top for more than ten years, several different companies have been number three and four during this period, with many shuffles along the way. There has been constant churn below the top slots, with several dramatic success stories for new vendors emerging during this same period. Since semiconductor companies are a main source of sales for EDA, we pay a lot of attention to the market and how it evolves. In this post we show one noteworthy market assessment and discuss some of the reasons for the changes and some of the implications for the industry as a whole.

Probably the most highly regarded semiconductor market reports come from iSuppli, which is now part of IHS. Wikipedia provides a nice summary of how the top semiconductor companies have changed since 2000 based on their revenue, although there does not appear to be a single summary of all the changes. As part of our market analysis of the semiconductor industry, we created the following table based on the iSuppli listings in Wikipedia:

Wikipedia also has listings from older years, but since these are from another source (Gartner Dataquest) and not always the top 20, we’ve chosen to focus on the above table for the purposes of this post.Note that this list includes only the business of selling semiconductors. Pure-play foundries such as TSMC are excluded, as is the foundry business for IBM, Samsung, and others. Even with this somewhat narrow view of the chip market, there are a number of trends that are clear. There has been an ongoing battle for third and fourth, with Toshiba and TI the most common holders of these spots. One other long-time supplier, STMicro, and the younger Renesas have also battled back and forth within the top ten.

Speaking of Renesas, another clear trend is the spin-out of the semiconductor business from vertically integrated companies and a series of mergers to create stronger and broader product lines. The detailed notes on the Wikipeda page mention dozens of such transactions, and this is by no means a complete list. Major industry moves affecting the results in our table included the following:

• 2013: Micron acquired Elpida
• 2011: TI acquired National, ON acquired Sanyo
• 2010: Renesas merged with NEC
• 2009: Qimonda filed for bankruptcy
• 2007: LSI acquired Agere
• 2006: AMD acquired ATI, Philips spun off NXP, Infineon spun off Qimonda
• 2005: AMD and Fujitsu spun off Spansion
• 2003: Motorola spun off Freescale, Mitsubishi and Hitachi spun off Renesas
• 2002: Lucent spun off Agere
• 1999: Siemens spun off Infineon, Hitachi and NEC spun off Elpida

This is also an incomplete list, but it shows how dynamic the semiconductor industry has been over the past 15 years. Another trend from the table is the decline or spin-off of the merchant semiconductor business for many of the traditional vertically integrated Japanese electronics manufacturers. In contrast, there are some clear rising stars during this period. Broadcom first made the top 20 list in 2005, and in less than ten years climbed to number eight. Hynix has grown steadily since its debut in 2001, and as of 2013 is in fifth. Micron has risen to number four with a big leap due to the acquisition of Elpida. Perhaps Qualcomm has had the most dramatic rise, entering the top 20 in 2003 and now achieving the coveted third spot for two years in a row.

The ever-changing landscape of the semiconductor industry should be no surprise. After all, in the early days of Silicon Valley, Shockley begat Fairchild, Fairchild begat National, Signetics, LSI Logic, AMD, and others. And so on and so on. In the 1980s, there was a flurry of big electronics companies buying small chip companies (Gould acquired AMI, Honeywell acquired Synertek, Harris acquired Intersil, etc.) During the same period, Chips and Technologies, Cirrus Logic, and others pioneered the fabless semiconductor model. This shook up the industry enough that many of the leading suppliers in the 1990s and beyond are fabless. As the cliche goes, the only constant in a technology-based business is change.

We hope you enjoyed this diversion. We were surprised that we were unable to find a table like the one above, so we created our own. We were fascinated at the insights it yielded and we wanted to share them. We strongly encourage you to comment with your own thoughts, critique our analysis, or simply get a dialogue going. The semiconductor industry continues to evolve and grow, the chips they produce continue to evolve and grow, and we at Breker want to be on hand to help every project team verify their most complex designs. Thanks for your support!

Tom A.

The truth is out there … sometimes it’s in a blog.

Tags: Breker, Broadcom, Cadence, chip, EDA, Freescale, functional verification, Hynix, IHS, Intel, iSuppli, Marvell, mentor, Micro, NVIDIA, Qualcomm, Renesas, Samsung, semiconductor, SoC, SoC verification, Synopsys, Toshiba, Valid

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