Intel could be about to overtake Samsung once again in the semiconductor market. The California-based company had long reigned as the largest semiconductor company worldwide until, just under a year ago, Samsung's high-profit margins placed the South Korean giant ahead of Intel for the first time in its history. However, according to research firm IHS Markit, this lead could once again be switched, with Intel taking back its crown.
According to the firm, Samsung's recent profit and revenue increases come from the company's memory chips. Strong demand and a weaker-than-usual supply have allowed the company to significantly hike the price of its offerings, thus allowing them to reach previously-impossible profit margins and revenue levels. In fact, sales in 2017 grew a staggering 53.6 percent in comparison to the previous year. This situation is, however, expected to change quite quickly, with Gartner analyst Andrew Norwood stating that “Samsung’s lead is literally built on sand, in the form of memory silicon.” Chinese manufacturers are set to significantly increase their output of NAND flash memory chips this year, and DRAM manufacturing capacity will follow suit in 2019, therefore forcing Samsung to once again lower its prices to much more competitive levels and proving to be a hit on profit levels. It is this that is likely to give Intel back its lead. After all, two-thirds of Samsung's revenue came from memory chip shipments, whereas the majority of Intel's revenue is still generated through processor sales. In fact, in 2017, Intel's total revenue hit $62.8 billion, of which only a small percentage came from memory chips sales - just $3.5 billion - and this is despite a 37 percent revenue jump for the year in that market.
Samsung does appear pretty optimistic about its future and is still increasing its manufacturing capacity in anticipation of future demand. But based on predictions, Shaun Teevens of IHS Markit says "that if a strong reversal in memory pricing were to occur it is possible that Intel could regain the top position." For now, though, both Samsung and Intel are looking for ways to increase both revenue and profits, with the former concentrating on expanding production capacity, while the latter is looking for growth in other segments of the market outside of its traditional microprocessor business, with Internet of Things' products playing a major role.