Without them, washing machines wouldn’t spin, cars wouldn’t start, drones wouldn’t fly, and cell phones, computers, and game consoles, like many other machines, wouldn’t even turn on. Chips are everywhere, but most of their companies are unknown to the general public, unlike famous tech companies like Facebook, Amazon, Apple or Google. Inside devices is a microscopic, ever-changing universe, where the competition is nanometers smaller than a virus, and smaller means more advanced.
For decades, the West has delegated its production to Asia, using the efficiencies of globalized supply chains to buy it at low prices. The pandemic, with its factory closures and shortages, and rising geopolitical tensions in Taiwan, the sector’s superpower, have shifted the paradigm: expensive as it is, Europe and the US want to relocate some production to reduce their dependence on Asia . These are some of the companies that dominate the semiconductor industry and are receiving many government subsidies to restore their autonomy in a strategic area, both civilian and military.
TSMC, the Taiwanese giant
Taiwan Semiconductor Manufacturing Company, known by its acronym TSMC, makes most of the modern chips used worldwide today – its global share is about 56%. With a market value of 500 billion euros, the company is the tenth largest listed company in the world. Its founder, Morris Chang, educated at elite universities such as Harvard, MIT and Stanford, has made Taiwan the epicenter of an ecosystem unrivaled elsewhere in the world, thanks in part to his government’s previous vision of providing it with significant tax cuts to support It became clear how important these devices would be. State-of-the-art chip technology thus became a kind of national project for Taiwan that was to emerge in the 1990s.
TSMC President Mark Liu with United States Vice President Kamala Harris on May 22. CARLOS BARRIA (Portal)
Neither China nor the US has matched the maturity of their assets. So much so that US historian Chris Miller, in his recent book Chip War, warns that a single Chinese missile against TSMC’s state-of-the-art facility “could easily cause hundreds of billions of dollars in losses.” dollars” from delays in the production of phones, data centers, automobiles and telecom networks. The company’s expansion outside of Taiwan is underway. TSMC is building a factory in Phoenix, Arizona, in which it will invest €37 billion, one of the largest investments in US history. The idea is that microprocessors with three and four nanometers for Apple iPhones, one of their main customers, will be developed there. The opening of another one in Saxony (Germany) with an estimated cost of 10 billion euros is also under consideration.
Samsung, much more than just phones
Samsung is considered one of Apple’s biggest competitors in the fight for the smartphone throne and is also one of the largest chip manufacturers in the world with a market share of 17%. And the South Korean company wants more. She has an ambitious long-term plan: Together with the government, she wants to invest more than 200,000 million euros over the next 20 years so that the Asian country’s semiconductor industry can make a qualitative leap.
South Korean President Yoon Suk-yeol is aware that there is intense competition, not only in semiconductors but also in electric cars, batteries, new green fuels and more generally in digitalization and ecological transition, for which he has not hesitated Support the country’s flag society. “The economic battleground that chips recently began has widened…States are providing extensive subsidies and fiscal support,” he said in March. With a market capitalization of around EUR 330,000 million, Samsung ranks 21st in the global ranking of listed companies.
Nvidia: the power of artificial intelligence
No company in the industry is experiencing a sweeter 2023 than American Nvidia. The artificial intelligence boom – applications like ChatGPT use its chips – has propelled the results of the company founded 30 years ago, elevating it to the exclusive club of companies worth more than a trillion dollars, where only Apple, accompanied Microsoft, the oil company Saudi Aramco, Alphabet and Amazon. The first thing that catches the eye of the company is its name. The three founders started calling it NV, initials for “next version” or “next version”. But for the final name, they wanted something different, so they searched for words beginning with the letters nv and found the Latin word invidia with the first letter removed.
Nvidia CEO Jensen Huang speaks during a press conference at the MGM during CES 2018 in Las Vegas on January 7, 2018. (Photo by MANDEL NGAN / AFP) (Photo credit should read MANDEL NGAN/AFP via Getty Images)MANDEL NGAN (AFP / GETTY IMAGES)
Time has made the name a fitting choice: its stock revaluations, up over 170% so far this year, have placed it sixth among the world’s publicly traded companies and made its shareholders the most envied company. His Q2 2023 revenue forecast of around $11,000 million smashed Wall Street analysts’ forecasts of $7,150 million. And even if the future of artificial intelligence is as bright as the experts predict, its growth potential is still enormous, so that at the current level it is even aiming to become the largest company in the world one day.
ASML: the European success story
Only 8% of the world’s chips are made in Europe, even though the continent consumes 20%, but in a chip’s labyrinthine supply chain there is room for many other tasks, from design to packaging. In this complex division of labor, which entails constant leaps from one country to another, there is one company without which the industry would have great difficulty functioning. It has an unattractive four-letter name, ASML — another acronym, this one for Advanced Semiconductor Materials Lithography — it’s Dutch, and almost all of its ultraviolet lithography machines are used to print transistors that are almost as small as the diameter of a human chromosome silicon wafer. Without them, the production of next-generation chips is not possible. You can say that they are the ones who produce for the manufacturers. And that is paid for: ASML is the second largest European company with a market value of 270,000 million, only behind the French luxury group LVMH and well ahead of the Spanish Inditex.
ASML facilities in Veldhoven (Netherlands).Handout. (via Portal)
Its importance has put it in a difficult position geopolitically. The United States hasn’t just imposed restrictions on its chipmakers’ exports to China to prevent the Asian giant from gaining access to cutting-edge technology with which it could compete. It has also lobbied partner countries like Japan and the Netherlands to have their companies do the same, and it wasn’t long before the ASML name began to appear. The Dutch government announced restrictions on the export of the “most advanced” semiconductor technology. The company derives 15% of its revenue from shipments to China, so it remains to be seen how the decision will affect its bottom line.
The crossfire between the powers that be had other implications for ASML, some more typical of a spy movie. Last February, the company reported that one of its employees in China stole information about its technology, raising concerns about how to protect intellectual property in an atmosphere of high tension. In an interview with the Financial Times three months ago, CEO Peter Wennink likened the semiconductor moment to the 1973 oil crisis. “Oil was there until it was gone, and it was a strategic product.” Fast-wind the tape 2020 ahead and the same thing is happening with the chips.
Intel: a Silicon Valley pioneer in low hours
Intel is often said to be the company that brought silicon to what is now known as Silicon Valley, or in its most famous name: Silicon Valley because it is the material from which the chips are made. The company is probably the best-known on the list, but it’s also the worst-performing company. The technology announces the timing of its development on its website. Gordon Moore passed Bob Noyce’s house while mowing the lawn, and from that seemingly colloquial conversation, Intel was born shortly thereafter, in July 1968. From this time comes Moore’s famous law, in which he confirms that the number of transistors on a chip and thus the computing power doubles every two years while the price falls.
The President of the Spanish Government, Pedro Sánchez, together with the CEO of Intel, Pat Gelsinger, at the World Economic Forum in Davos 2022.Moncloa/Fernando Calvo (Moncloa/EFE)
Intel was at the forefront of innovation in its early decades, but in recent decades it has experienced a regression: from being the leader in the computer market with its processors, the company has lagged behind by not entering the mobile market. And it’s losing places at the top of the industry league: Google and Facebook ads generate more revenue than the very complex and sophisticated chips it operates in that have been used by a new wave of Silicon Valley wizards to overtake it.
On February 15, Pat Gelsinger stepped in as the company’s new CEO to halt the inevitable decline Intel seemed to be heading into. The announcements were bombastic: multimillion-dollar investments – almost 20 billion euros – to build two chip factories in central Ohio. And the very favorable environment in which the Joe Biden administration is launching a plan of more than 250,000 million euros to gain autonomy in the strategic semiconductor sector. However, the company that once spearheaded the technological revolution continues to be seen as slower when it comes to adapting to change: It hasn’t jumped on the artificial intelligence chip bandwagon, and Apple announced days ago that it’s using it of its processors it will permanently discontinue itself, leaving a significant gap in its accounts.
Its market value of €120 billion is eight times lower than Nvidia’s when it surpassed it less than five years ago. And his landing in Germany is in limbo after he asked for more public aid in exchange for building his factory in Magdeburg. Spanish President Pedro Sánchez is among those who tested Gelsinger. This happened at the Davos Forum last year, but there is still no news of these companies investing in Spain, which has 12,250 million in subsidies ready for those who take the plunge.
Micron: the victim of the Chinese veto
Although its size is not negligible, with a market value of 72,000 million euros, it is not one of the dominant companies in the industry, but Micron’s has been one of the most recognizable names in recent times. To find the reason, we have to mention China again. The country’s cyberspace regulator announced on May 22 that Micron failed its security tests and has banned major infrastructure operators from buying its products. Micron sells heavily in China, which accounts for 11% of its sales, and Beijing’s gesture is a reflection that the company doesn’t want as many American chips. The duel of power is thus once again being transferred to the corporate world and is causing uncertainty for both Chinese companies with interests in the USA – in the case of TikTok or Huawei – and vice versa.
Chip components from the American manufacturer Micron.Portal
SMIC: the great Chinese hope
The major Chinese company to develop its own ecosystem is called Semiconductor Manufacturing International Corporation (SMIC). The company is in the crosshairs of Washington, which in 2020 restricted exports of advanced semiconductor manufacturing tools to the company after concluding that there was an “unacceptable risk” that its products could be used for military purposes. In other words, he fears SMIC chips will end up in the guts of weapons used, for example, in a future invasion of Taiwan, and thus does not want Western companies to help in any way to provide him with technology. This puts SMIC in a difficult position. As soon as the veto was announced, their shares fell, but then they recovered and their value is around 30,000 million euros, a far cry from those of their competitors.
AMD and Qualcomm, the competitors
A testament to the strength of the sector is the density of large companies operating there. The main names include AMD (almost 200,000 million market value) and Qualcomm (123,000 million). However, their trajectories are far from similar. The former has been instrumental in one of the biggest revivals in America’s corporate world, from near bankruptcy and worth 60 times what Intel was a decade ago, to producing some of the most widely used chips, outperforming Intel and surging on Wall Street nearly 5,000% recorded The leadership of the board of Taiwanese origin Lisa Su, CEO since 2014. The second, usually identified with Apple, of which it is one of its major suppliers, is experiencing, as happened to Intel, a moment of uncertainty in the face The more the Apple company isn’t very likely to start making the 5G chips it needs for the iPhones it’s launching in 2024.
AMD CEO Lisa Su during a conference call at CES in Las Vegas in 2019. Portal
Follow all information from Business And Business on Facebook and Twitteror in our weekly newsletter
Five Day Agenda
The day’s major economic dates, with the keys and context to understand their scope.
RECEIVE IT BY MAIL
Subscribe to continue reading
Read without limits