Intel may be able to take back its crown from Samsung

With higher revenue and operating profits compared to Intel during Q2 2017, Samsung ended Intel’s 25-year reign as the largest semiconductor-based chipmaker in the world. By the time the year wrapped up, Samsung had properly dethroned Intel by becoming the largest chipmaker in the world by revenue.

This has been a significant achievement for Samsung despite the fact that Intel processors are used in a vast majority of computers worldwide. While Samsung makes processors as well, they’re primarily used in mobile devices and not desktops/notebooks. Samsung’s lead is based on its dominant position in the memory chip market. Some analysts expect that lead to drop this year which could result in Intel winning back its crown from Samsung.

A price reversal could put Intel on top again

Research firm IHS Markit has released its annual global semiconductor industry data for 2017 which also confirms that Samsung has overtaken Intel as the top semiconductor supplier in the world based on revenue. Samsung saw a year-over-year sales growth of 53.6 percent.

Samsung dominates the global memory chip market. You’ll find it difficult to come across a smartphone or tablet these days that doesn’t have a RAM from Samsung inside. The company has also significantly improved its position in the solid state drive market.

Samsung’s revenue gains have thus been driven by its memory chips whereas Intel relies on its microprocessors for PCs and servers for a big chunk of its revenue. IHS and Gartner analysts both note that Samsung’s lead isn’t as secure as Intel’s was when it emerged as the leader 25 years ago because the latter’s lead relied on microprocessors.

Samsung’s gains last year were due to strong price hikes for memory chips as two-thirds of the company’s revenue growth came from its memory products. Analysts expect prices to drop this year for NAND flash memory initially followed by DRAM in 2019 as Chinese manufacturers enhance their production capacity.

“We then expect Samsung to lose a lot of the revenue gains it has made,” says Gartner analyst Andrew Norwood. IHS Markit analyst Shaun Teevens makes a similar prediction, saying that if there’s a strong reversal in memory pricing it’s quite likely that Intel could regain the top position.

Samsung has been keeping an eye on what the Chinese are trying to do in the memory market and it’s not threatened by them so far. The company continues to expand its production capacities to meet future demand.

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