Competition among the "Four Heavenly Kings" of Semiconductors Intensifies

Latest update time：2021-08-10

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The competition and cooperation among the leading companies in the semiconductor industry are the most concerned by the industry, and are the most representative and convincing. To a certain extent, they reflect the development status and trend of the entire semiconductor industry. In the entire semiconductor industry chain, compared with the upstream equipment, materials, EDA, IP, and downstream packaging and testing companies, the three types of companies in the middle stream, IDM, Foundry and Fabless, are the largest in terms of market size, influence, revenue, etc. The competition and cooperation between them are the most concerned and representative.

In recent years, the "kings" of the IDM industry are none other than Intel and Samsung. Although Intel is the traditional overlord, since 2017, Samsung has surpassed Intel in the year-end revenue rankings in 2017 and 2018 by virtue of its control over the memory market and revenue, becoming the new leader. Judging from the revenue in the most recent quarter (the second quarter of 2021), Samsung has once again surpassed Intel.

TSMC is the undisputed and undoubted “king” of the foundry industry and needs no further elaboration.

In the fabless industry, Qualcomm and Broadcom are the traditional two giants in terms of revenue. However, judging from the development and growth momentum in recent years, as well as the competition and cooperation relationship with the other three "kings" Intel, Samsung and TSMC, AMD is undoubtedly the most representative and has a stronger relevance.

With the development of the semiconductor industry, the competition and cooperation between IDM, Foundry and Fabless companies have become more varied and no longer as "simple" as in the early years. As representatives of these three major formats, the competition and cooperation of the above-mentioned "Four Heavenly Kings" are more interesting, highly representative of the entire industry, and still have new changes and developments.

Existing competition

The existing competitive relationship among these four leading companies is the clearest and relatively simple, namely the competition between AMD and Intel in the CPU field, and the competition between Samsung and TSMC in the wafer foundry field.

In terms of CPU, although Intel is still the dominant player, Intel's situation is becoming more and more urgent due to AMD's fierce offensive, especially in terms of PC CPU, where AMD is taking over the market with great momentum.

In the past few years, as the overlord of the semiconductor industry, Intel's annual revenue has been around US$70 billion, with little change. However, just six years ago, AMD's annual revenue was still hovering around US$2 billion, and by 2020, the company achieved revenue of approximately US$9.8 billion, like riding a rocket. The just-released second quarter 2021 financial report shows that Intel is suppressed by Samsung, while AMD's quarterly revenue reached about US$3.8 billion, and the trend of one rising and the other falling is more obvious.

In addition, AMD is acquiring Xilinx, which is largely aimed at Intel. The focus is to further develop the server chip market. In addition to CPU and GPU, it also relies on the acceleration and communication advantages of FPGA to enhance its competitiveness in the server market.

In terms of wafer foundry, TSMC continues to consolidate its leading edge, especially in advanced processes below 7nm, always leading Samsung by half a generation, and with a clear yield advantage, giving it an advantage in competing for high-quality customers. Currently, TSMC's share of the global wafer foundry market has reached about 56%, while Samsung, which ranks second, has a market share of 18%. This gap is difficult to narrow in a short period of time.

Future competition

In addition to the continuation and development of existing competition, Intel will vigorously develop its foundry business, making the competition relationship among the four companies more complicated. Intel not only has to face AMD's strong counterattack, but also has to take food from TSMC and Samsung, which have been working in the foundry market for many years. The pressure is not small. From the current situation, Qualcomm and Google have become the first customers of Intel's foundry business. Before Intel, these two companies have been long-term customers of Samsung. From this point of view, Intel's foundry business seems to have a greater impact on Samsung.

Cooperation is more important

Compared with competition, the "Four Heavenly Kings" are closer in cooperation, and the scope of cooperation is wider and there are more changes.

At present, these four manufacturers have formed a cooperative relationship of AMD->Samsung->Intel->TSMC->AMD, which are closely linked to each other.

The cooperation between AMD and Samsung is mainly reflected in GPU and related authorization. In 2019, Samsung and AMD announced a multi-year strategic partnership. Samsung obtained AMD's GPU IP license, allowing Samsung to use its GPU IP in areas that do not compete with AMD, such as mobile phones and tablets. The IP obtained by Samsung will not appear on the PC platform.

At the 2021 Computex Taipei Computer Show held in May this year, AMD CEO Lisa Su announced that she would bring her own RDNA 2 architecture GPU to Samsung Exynos SoC to replace the original Mali GPU.

In July, it was revealed that Samsung is about to launch the Exynos 2200 processor code-named "Pamir", which is built on a 4nm process and integrates an AMD GPU. According to previously disclosed information, the Samsung Exynos 2200 will use the RDNA2 graphics microarchitecture, which is the technology used in PlayStation 5, Xbox Series X, and AMD Radeon RX graphics cards. However, due to architecture and power consumption reasons, the specific performance of Samsung Exynos combined with AMD GPU may not reach the same level as game consoles, PCs, or even laptops, but it can still give Samsung's Exynos an advantage in the competition. As usual, the Samsung Galaxy S22 series is expected to be the first to commercialize the Exynos 2200 processor.

Intel's cooperation with Samsung and TSMC has always been the focus of the industry. At the beginning of this year, Intel's advanced process chip outsourcing plan began to have new developments: Intel negotiated with TSMC and Samsung to discuss outsourcing some of its most advanced chips to these two companies.

In the past year, Intel has started some test wafer projects at TSMC, including the GPU using 6nm process expected to be launched in the first half of this year, and the Atom processor using 5nm process expected to be mass-produced and applied to mobile platforms in the second half of this year. Some institutions estimate that about 5% of Intel processors used in notebooks this year will be outsourced to TSMC for production. In addition, if Intel and TSMC reach a 3nm process processor foundry agreement, it is not ruled out that TSMC's capital expenditure will be increased again this year.

The cooperation between Intel and Samsung is more reflected in the 14nm process CPU. In the past few years, due to insufficient production capacity, Intel's main process 14nm has been strong, making its CPU in short supply, which objectively gave AMD the opportunity to catch up. Samsung's 14nm process is the most mature in the foundry industry. In this regard, the story of Samsung and TSMC has been circulating in the past few years.

The cooperation between TSMC and AMD is even more eye-catching. In the past year, AMD has had the fastest growing demand for TSMC's production capacity, especially 7nm orders, because AMD's ZEN 2 and the upcoming ZEN 3 architecture CPUs are based on the 7nm process, and the company's growth momentum in the CPU market is very strong. In addition, AMD's GPUs are also manufactured by TSMC, and are still mainly based on the 7nm process. Since AMD's CPUs and GPUs occupy a very important position in Sony and Microsoft's new generation of game consoles, and the epidemic has caused a surge in market demand for these new game consoles, this has provided AMD with an excellent business opportunity. It is reported that both Sony's PlayStation 5 and Microsoft's XBOX Series X use AMD's customized 8-core Zen 2 architecture CPU, and the GPU uses AMD's RDNA 2 architecture products.

AMD's upcoming new generation of processors will use a 5nm process and has already lined up at TSMC. At present, AMD is likely to become TSMC's second largest customer in terms of the most advanced process, second only to Apple.

Foundry becomes the industry's focus

From the above, we can see that from the cooperative relationship of AMD->Samsung->Intel->TSMC->AMD, each two companies are direct competitors, and the bond connecting them is the wafer foundry business. This also reflects from one aspect the increasingly prominent role and status of the foundry industry in the current semiconductor industry. This is reflected not only in the above cooperation, but also in almost all key links of the current semiconductor industry.

For example, the packaging and testing business in the downstream of the industry chain is increasingly converging towards the upstream IDM and Foundry manufacturers. TSMC, Samsung and Intel are all developing their own unique packaging technologies.

In the early years, when IDM had excess capacity, it would provide foundry services to the outside world. However, in recent years, with the substantial growth in capacity demand and the emergence of innovative applications, chips, and processes, traditional IDM capacity outsourcing services can hardly meet market demand, and professional foundry services have become more and more prominent in the market. This is also the fundamental reason why Intel is determined to attack the foundry industry. In fact, the company started to get involved in the foundry business many years ago, but it has never really paid attention to it and invested in it, making it almost uncompetitive in the market. This year, the launch of IDM 2.0 reflects the company's determination to develop its foundry business. However, it is almost impossible to catch up with TSMC in the next ten years. It is more likely to compete with Samsung for market share and customer expectations, but it is also difficult. Like Samsung, it will be difficult to develop the foundry business on the basis of the original IDM.

In terms of cooperation models, foundry manufacturers have also become the source of innovation. Take UMC as an example. In the past year, the market demand for its mature processes has skyrocketed, causing some IDM and fabless customers to purchase semiconductor equipment out of their own pockets and provide it to UMC in order to reserve its production capacity in the next few years. This novel cooperation model binds production capacity. This was unimaginable before.

In addition, in the current seller's market where demand for production capacity is exploding, the world is extending olive branches to high-level foundry manufacturers. The representative company is naturally TSMC. The United States, Japan and Europe are all trying hard to win the company to build advanced process wafer fabs. Samsung is also not willing to lag behind and is also actively building wafer fabs outside of South Korea.

Conclusion

The competitive and cooperative relationship of the "Four Heavenly Kings" is a representative and microcosm of the entire semiconductor industry. At present, there are countless Fabless companies in the world, especially in mainland China. In recent years, Fabless companies have sprung up like mushrooms after rain, and the demand for production capacity has increased greatly. At the same time, the traditional advantages of IDM are fading, and more cooperative relationships have made foundry the focus of the industry. In this situation, does the strategy of vigorously developing IDM in some regions still have a bright future?

*Disclaimer: This article is originally written by the author. The content of the article is the author's personal opinion. Semiconductor Industry Observer reprints it only to convey a different point of view. It does not mean that Semiconductor Industry Observer agrees or supports this point of view. If you have any objections, please contact Semiconductor Industry Observer.

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