Has HiSilicon become one of the top 10 semiconductor companies in the world?

International market research firm IC Insights recently announced the sales rankings of the world's top 10 semiconductor manufacturers in the first quarter of 2020, and HiSilicon became the first Chinese semiconductor company to be included in the list. What are the driving factors behind this?

IC Insights, an international market research organization, recently announced the sales rankings of the world's top 10 semiconductor manufacturers in the first quarter of 2020. The top five are Intel, Samsung, TSMC, SK Hynix, and Micron. However, unlike last year, there are two new manufacturers in the 6th to 10th place, namely NVIDIA at 9th place (11th last year) and HiSilicon Semiconductor at 10th place (15th last year). HiSilicon is the first mainland Chinese semiconductor company to enter the top 10 list, setting a new record. What is the reason behind this?

Mobile phones and chips are becoming more autonomous

According to a report by IC Insights, there are 6 American manufacturers among the top 10 semiconductor manufacturers, including Intel, Micron, Broadcom, Qualcomm, Texas Instruments and NVIDIA; 2 from South Korea, namely Samsung and SK Hynix; and 1 each from Taiwan and mainland China, namely TSMC and HiSilicon.

IC Insights pointed out that the total sales of the top 10 semiconductor companies in the first quarter of this year increased by 16% over the same period last year, which is twice as fast as the global semiconductor industry's average annual growth of 7%; 9 of the top 20 companies had sales of at least US$3 billion.

It is worth mentioning that HiSilicon jumped five places in this ranking, with sales of nearly $2.7 billion in the first quarter, up 54% from $1.735 billion in the same period last year. As a result, HiSilicon's ranking climbed from 15th last year to 10th, making it the first mainland China semiconductor supplier to rank in the top 10 globally.

▲2020 Q1 global semiconductor manufacturers sales TOP10.

Why did HiSilicon achieve such impressive growth in the first quarter of this year, and even become one of the top 10 semiconductor manufacturers in the world? An analyst familiar with the semiconductor industry believes that there are two main factors: mobile phone sales and increased chip autonomy.

Smartphone chips are a very important product line for HiSilicon Semiconductor. As Huawei's semiconductor design department, the chips it develops have always been the key to Huawei's mobile phone differentiation. Especially during the Sino-US trade war, HiSilicon plays a key role as a "rescuer", replacing American semiconductor products that were banned from being shipped to Huawei by the United States with its own products.

A report by Chinese semiconductor research firm CINNO Research pointed out that in the first quarter of 2020, HiSilicon's smartphone processor shipments were 22.21 million. Although this was not far from last year's 22.17 million, Qualcomm's market share dropped significantly from 48.1% in the same period last year to 32.8%. HiSilicon thus surpassed Qualcomm to become the leader in smartphone processor shipments in mainland China in Q1.

"For example, the recently launched Kirin 820 series has helped the sales of Huawei's mid-range 5G mobile phones, so it can be inferred that a large part of the growth in the first quarter came from mobile phone chips," the analyst explained.

In addition to the boost from mobile phones, another factor is that HiSilicon is actively improving its chip autonomy. In addition to smartphone chips, HiSilicon's product line also includes data center chips, artificial intelligence chips, image processing chips, and Internet of Things chips.

The US-China trade war is the key to continued prosperity

In the past, these chips were mostly self-sufficient (supplied to the parent company Huawei) and not sold to the outside world, especially the Kirin series chips. However, HiSilicon began to change its operating strategy at the end of last year. Zhao Qiujing, the marketing director of platform and solutions at Shanghai HiSilicon Technology Co., Ltd., publicly stated at the Shenzhen Electronics Show that in the future, it will become a fully market-oriented chip design company. In other words, in addition to continuing to supply Huawei, it has also begun to publicly sell its various chip products.

"Another important reason why HiSilicon was able to grow significantly in the first quarter of 2020 was to increase the degree of chip autonomy. For example, in addition to smartphones, they have also been strengthening the installation rate of server chips in other brands," said the analyst.

Today, HiSilicon has become one of the top ten semiconductor companies in the world, but whether this prosperity can be maintained remains to be seen. Analysts pointed out that the Sino-US trade war is still a key factor, especially when Huawei's mobile phone sales overseas continue to be affected. Whether HiSilicon can still achieve such growth in the future is still a question mark.