AMD, Qualcomm, Nvidia, Broadcom, and MediaTek "separate" chip design, Huawei HiSilicon has faded out

Core stuff reported on May 6 that the top five chip design giants in the world are experiencing a breakdown in revenue. The four chip giants Qualcomm, Broadcom, MediaTek, and Nvidia have entered the top five chip design companies for ten consecutive years, while AMD has 7 times in ten years. Ranked in TOP5. AMD's revenue last year was a full $11.6 billion more than the sixth place.

Ranking of the world's top ten chip design companies by revenue from 2018 to 2021 (Data sources: TrendForce, IC Insights, Note: TrendForce ranking Qualcomm only calculates QCT revenue, NVIDIA deducts OEM/IP revenue, Broadcom only calculates The revenue of the semiconductor sector is somewhat different from the company's financial report data)

In 2021, the revenue of the top five chip design companies will be between $33.6 billion and $16.4 billion, and the revenue of the last five in the TOP10 will be between $4.8 billion and $1.5 billion. The fifth-ranked AMD's revenue requires the combined revenue of the sixth-ninth chip design companies to compete.

In the past ten years, the changes between the sixth and tenth places have not only been greater, but also the revenue gap between the top five factories and the bottom five factories in the TOP10 has been increasing in the past three years. In 2019, the revenue of the fifth AMD was more than double that of the sixth Xilinx, a difference of US$3.5 billion; the revenue of AMD, which is still the fifth in 2021, was more than double that of the sixth Novatek, and the gap reached 3.5 billion US dollars. $11.6 billion.

Just looking at 2021, the top ten chip design companies will have combined revenue of US$127.405 billion, of which the top five will account for more than 85%.

More importantly, in the past two years, Dialog, which was originally ranked tenth, was annexed by Japanese semiconductor giant Renesas, and Xilinx, which ranked ninth, will be acquired by AMD. That gap is widening as giant acquisitions continue to change the semiconductor landscape.

In February of this year, AMD completed the acquisition of the ninth-largest chip design company and FPGA leader Xilinx, and the revenue of the two parties will be combined in 2022. At that time, the revenue of an AMD company is likely to be higher than the sum of the five chip design companies in the TOP10.

In ten years, the world's top 10 chip design giants have changed their world

According to IC Insights ranking, in 2012, the top ten chip design companies in the world were Qualcomm, Broadcom, AMD, NVIDIA, MediaTek, Marvell, LSI, Xilinx (acquired by AMD in 2022) ), Altera (acquired by Intel in 2015), and Avago (AVAGO).

At that time, the fifth-place MediaTek and sixth-place Meiman Electronics had revenues of US$3.3 billion and US$3.1 billion respectively, a difference of only US$200 million. In 2021, the revenue gap between fifth place AMD and sixth place Novatek has widened to $11.6 billion, sixth place Novatek + seventh Meiman Electronics + eighth Realtek + ninth Xilin Think's combined annual revenue is only $16.5 billion, $100 million more than AMD's.

The revenue gap between the fifth largest chip design company and the sixth-largest chip design company in 2012-2021

In February of this year, as regulatory authorities in various countries have approved AMD’s acquisition of Xilinx, AMD has announced the completion of the acquisition, and its revenue will skyrocket again. The revenue of AMD + Xilinx is already higher than the sum of the last four chip design companies.

In the past ten years, new chip design companies have appeared in the list, Huawei HiSilicon, Spreadtrum (later acquired by Ziguang Group, and merged with Ruidike to become Ziguang Zhanrui), Novatek, Dialog, etc. are typical of the enterprises.

However, most of these emerging companies rank low, and the four giants Qualcomm, Broadcom, MediaTek, and Nvidia have never fallen out of the top five and established they are leading-edge early. AMD has been hovering between third and sixth place and has been in the TOP5 since 2019.

Among the five chip giants, Qualcomm is the leader in smartphone SoC and RF front-end, and also owns a large number of communication patents. In 2021, Qualcomm's revenue will be US$33.566 billion, and its main revenue growth includes smartphone products, radio frequency products, and Internet of Things products, making it the world's largest chip design company.

Nvidia is the absolute leader in the global GPU market, with revenue of $26.91 billion in fiscal 2022, making it the world's second-largest chip design company.

Broadcom is a veteran semiconductor giant in the United States. It has a high market share in various semiconductor products such as set-top box SoCs, wired network chips, RF front-ends, Wi-Fi chips, and corresponding software services. In 2021, Broadcom's revenue is $27.45 billion, ranking third.

MediaTek is Qualcomm's main competitor and has a layout in smartphone SoCs, TWS headset chips, and IoT chips. In 2021, MediaTek's revenue will be NT$493.415 billion (approximately RMB 1127.95), making it the largest manufacturer of smartphone SoC shipments.

However, although today's top five chip design companies have been the industry leaders as early as ten years ago, the revenue gap between the fifth and sixth places has only appeared in the past three years.

Backed by key markets, semiconductor mergers and acquisitions intensify faults

Starting in 2019, the top five chip design giants and the top 10 middle and bottom five manufacturers have gradually widened the gap in revenue. This is not only because the top five chip design giants gained an advantage in the market earlier, but also because they are in fast-growing markets such as smartphones, data centers, 5G, and PCs.

According to the data statistics company Statista, from 2020 to 2030, smartphones will be the largest segment in the global semiconductor market. In 2020, the smartphone semiconductor market will reach 116 billion US dollars. $210 billion.

After smartphones are PCs, services\data centers, and storage markets (Servers, data centers, and storage). The sales of the two types of semiconductors in 2020 are $100 billion and $76 billion, respectively, which also happens to be Qualcomm. , NVIDIA, Broadcom, MediaTek, and AMD's business scope of five chip design companies.

Global semiconductor sales by market (Image source: Statista)

From 2018 to 2021, three of the top ten chip design companies fell behind, but these companies did not drop out of the list because of market competition or because of the rapidly growing revenue of other chip design manufacturers. The fact is that Huawei HiSilicon, Dialog, and Xilinx no longer appear in the list due to factors such as being sanctioned by the United States or being acquired by other industry leaders.

In 2018, Huawei was included in the Entity List by the U.S. government. Huawei HiSilicon, which can design 14nm smartphone SoCs, has difficulty obtaining the production capacity of fabs such as TSMC. Kirin 9000 has become the swan song of Huawei's 5G mobile phone SoC, and Huawei's mobile phone can only use 4G SoC.

In 2020 and 2021, the American FPGA leader Xilinx and the British veteran analog chip factory Dialog, among the top ten chip design companies, have been successively acquired, and both acquisitions have now been completed.

In October 2020, AMD launched an acquisition of Xilinx for $35 billion. In February 2022, the State Administration of Supervision conditionally approved AMD's acquisition of Xilinx. After that, AMD announced the formal completion of the acquisition of Xilinx.

In February 2021, Japanese automotive chip giant Renesas Electronics announced the acquisition of Dialog for $6 billion. In August 2021, Renesas Electronics announced the completion of the acquisition of Dialog. And on October 1 of the same year, Vivek Bhan, the former senior vice president, and general manager of Dialog took over as the senior vice president and deputy general manager of the Automotive Solutions Business Unit of Renesas Electronics.

In 2021, Dialog will no longer be among the top ten chip design companies in the world and will be replaced by Qijing Optoelectronics, a Taiwanese display driver chip design company. In 2022, after AMD realizes the merger with Xilinx, its revenue scale may further increase, once again widening the gap between the world's top five chip design companies and the sixth to tenth places. The fault will grow again.

The top five chip design giants create legendary stories

In addition to market and M&A factors, the top five chip design giants also stand out from the competition and have their own legends.

Qualcomm: Started from communications, defeated Techtech to become the king of mobile SoCs

Among the top five factories, Qualcomm was the earliest wireless communication technology company established in 1985. In 1989 and 1993, Qualcomm introduced division multiplexing technology (TDMA) and division multiplexing technology (CDMA) respectively, creating a communication standard in the 2G and 3G eras.

In 2000, Qualcomm sold the mobile phone and network equipment business, focusing on the research and development of communication technology and mobile phone SoC. Due to its accumulation in the communication field and its patent wall, Qualcomm surpassed Texas Instruments to become the world's largest wireless chip supplier in 2007.

In 2021, Qualcomm will continue to be the world's largest chip design company, with its non-licensed business revenue reaching US$27 billion. The main revenue growth includes smartphone products, radio frequency products, and Internet of Things products.

According to the 2021 earnings report, Qualcomm's smartphone products increased by $6.369 billion due to increased demand for 5G products from Apple and other OEMs, of which $3.6 billion was due to growth in Qualcomm's SoC shipments.

In addition, Qualcomm's RF products revenue increased by $1.796 billion, automotive products increased by $331 million, and IoT products increased by $2.030 billion.

Qualcomm’s 2021 business revenue (data source: Qualcomm’s 2021 financial report)

Nvidia: Betting on artificial intelligence to become the leader in AI computing

Nvidia was founded in 1993, and its original intention was to develop graphics rendering chips in PC computers. Nvidia launched its first product, the NV1, in 1995, but sales were poor.

After 1997, with follow-up products such as NV3, TNT, and TNT2, Nvidia established its market position by defeating its original competitor in the field of image rendering chips, 3DFX. As gaming and video demand continued to increase, Nvidia introduced its first GPU (graphics processing unit) in 1999, which was well-received.

In 2004, Huang Renxun, the founder of NVIDIA, found that the GPU is far more efficient than CPU in parallel computing. As a result, NVIDIA began to develop CUDA programming tools, laying a solid foundation for GPUs to become general-purpose processors. In 2012, Geoffrey Hinton at the University of Toronto submitted a deep convolutional neural network algorithm called AlexNet, which won first place in the ImageNet computer vision challenge, which was trained on an NVIDIA GTX 580 GPU. Its error rate is only 16%, and the error rate of the second place is more than 56%.

Due to the advantages of GPU in artificial intelligence algorithms and parallel computing, GPU has gradually become a general-purpose chip in the field of artificial intelligence computing and data centers. Nvidia, which laid out artificial intelligence early, has become a big winner in the era of artificial intelligence.

Nvidia’s fiscal 2022 revenue reached $26.91 billion, up 61% year-over-year, mainly due to Nvidia’s gaming, data center, and professional visualization businesses.

In fiscal 2022, Nvidia's gaming business grew 61% year-on-year to $12.46 billion; its data center business revenue increased 58% year-on-year to $10.61 billion; professional visualization business revenue increased 100% to $2.11 billion; automotive and Robotics grew 6 percent to $566 million.

Among these NVIDIA businesses, the three most important revenues of game business, data center, and professional visualization all set new revenue records, helping NVIDIA surpass Broadcom to become the second-largest chip design company.

NVIDIA's fiscal year 2022 revenue of each business (data source: NVIDIA's fiscal 2021 financial report)

Broadcom: Avago makes a "new" Broadcom with a small swallow

Founded in 1991, Broadcom is an industry leader in the communications field. In 2000, Broadcom launched a frenzy of acquisitions, making more than five acquisitions in the field of communications, with a total value of more than 6 billion euros.

Since then, Broadcom has completed mergers and acquisitions in multimedia and storage businesses, including the acquisition of Silicon Spic for 1.4 billion euros and the acquisition of NetLogic Microsystems for 2.8 billion euros.

However, the "acquisition maniac" Broadcom will also be acquired one day. After acquiring U.S. chip supplier LSI for $6.6 billion, Avago acquired Broadcom for $37 billion in 2015, completing the semiconductor industry's famous takeover. Since then, the new Broadcom has continued to maintain its leading position in communications, multimedia, and other fields.

In November 2017, Broadcom also launched a takeover offer to Qualcomm, proposing to acquire all of Qualcomm's outstanding shares for $105 billion, and then raised the offer to $121 billion. However, in March 2018, U.S. regulators rejected Broadcom’s plan to acquire Qualcomm, citing national security concerns, and this shocking acquisition ended in failure.

In 2021, Broadcom's revenue is US$27.45 billion, and its main products include various semiconductor products and software services such as set-top box SoCs, wired network chips, RF front-end modules, and Wi-Fi chips.

Broadcom products and terminal markets (Image source: Broadcom’s fourth-quarter 2021 financial report)

MediaTek: Starting with DVD chips, it has become the number one smartphone SoC shipments

MediaTek was founded by Cai Mingjie from Taiwan, China, who was the first person to introduce semiconductor technology in Taiwan, nicknamed "The Godfather of IC Design in Taiwan". In 1997, MediaTek was founded in Hsinchu Science Park, Taiwan, China.

MediaTek started its business by relying on optical disk storage technology and DVD chips. It integrated the originally expensive video and digital decoding chips together and provided software solutions, which greatly reduced the price of DVDs. In 2001, MediaTek accounted for 60% of the DVD chip market and was listed on the Taiwan Stock Exchange the same year.

In 2003, MediaTek entered the mobile phone chip industry, and also through high integration, it can provide mobile phone chips and software solutions at a low cost.

In the era of smartphones, MediaTek has been selected by domestic mobile phone brands such as Huawei and ZTE through its cost-effective strategy to enter the mid-to-low-end smartphone market and become the main competitor of Qualcomm.

In 2021, MediaTek's revenue will be NT$493.415 billion (approximately RMB 112.795 billion), an increase of 53.2%, a record high for two consecutive years, and a net profit of NT$231.605 billion (approximately RMB 52.945 billion), a year-on-year increase 63.6%.

According to MediaTek CEO Cai Lixing, its products have been used in 2 billion electronic devices, and all businesses have achieved growth. In the smartphone business, MediaTek's main revenue growth comes from growth in 5G smartphone sales, and it expects its 5G shipments outside of China to double in 2022.

According to market consulting firm Counterpoint, MediaTek's shipments will account for 46% of Android smartphone SoCs in 2021, compared with 35% for Qualcomm. Among them, most of MediaTek's market share growth came from the mid-to-low-end market where mobile phones were priced below $299, while Qualcomm dominated the SoC and RF front-end in mid-to-high-end models above $399.

Android mobile phone AP/SoC chipset share by price in 2021 (Image source: Counterpoint)

AMD: After 50 years of entanglement with Intel, Su Ma led the rejuvenation

AMD was founded in 1969. Its founders, Jerry Sanders and Intel, are also from Fairchild Semiconductor, but they are just sales executives, not tech giants. In Sanders' own words: "Intel pulled $5 million in VCs in 5 minutes, AMD took 5 million minutes to pull in $50,000."

Thanks to a colleague, Intel co-founder Robert Noyce financed AMD and authorized AMD to sell Intel processors. As a result, AMD, as a "second supplier", mainly focuses on cost performance, and competes with Intel to occupy the high-end and low-end markets respectively.

In 1981, Intel received an order from IBM for its groundbreaking 16-bit 8086 processor. It is reported that due to limited production capacity, IBM asked Intel to authorize AMD to jointly produce.

However, the cooperation between the two companies was not long, and Intel and AMD had a huge difference in licensing. The parties engaged in a lengthy lawsuit from 1987 to 1994. In the end, AMD won the case and obtained the x86 license.

Although AMD won the case, in 1993 Intel launched the 586 (Pentium) with a performance increase, leaving AMD behind. After that, AMD began to launch self-developed processors and began to compete with Intel on a technical level.

During this period, AMD and Intel's products competed with each other and became a pair of "mortal enemies". At the Intel IDF developer conference in March 2005, AMD even sponsored the aerobatic team to pull out the words AMD "Turion 64" above it.

In 2006, AMD acquired ATI, the second-largest GPU at the time, for $5.4 billion, spanning the two major markets of CPU and GPU. However, in less than two years, AMD sold the Imageon product line of ATI's mobile business unit to Qualcomm for $65 million, missing out on the mobile market, and gradually falling into a disadvantage. At the worst, it even considered selling the company's headquarters building.

In 2014, Su Zifeng took over as AMD's CEO and was reinvigorated by building better products, enhancing customer collaboration, and streamlining business processes, focusing on markets such as gaming, data centers, and embedded devices.

In October 2020, AMD launched the acquisition of Xilinx, the US FPGA leader, with a transaction value of US$35 billion. In February 2022, AMD announced the formal completion of the acquisition of Xilinx after the approval of regulatory authorities in various countries.

In 2021, AMD's revenue is $16.4 billion, an increase of 68%, mainly due to the growth of computing and graphics (Computing and Graphics) and enterprise, embedded, and semi-custom (Enterprise, Embedded,  and Semi-Custom) two divisions' revenue growth.

Revenue from its computing and graphics segment was $9.332 billion, up 45 percent; embedded and semi-custom revenue was $7.102 billion, up 113 percent.

2021 AMD's business revenue ratio (Source: AMD 2021 Financial Report)

Moore's Law promotes oligopoly, and a new node in the chip design industry is coming?

In the past two years, due to the impact of the new crown pneumonia epidemic, the demand for chips in the fields of smartphones, data centers, and PCs has grown rapidly, and the revenue of chip design giants such as Qualcomm, Nvidia, Broadcom, MediaTek, and AMD has also shown a trend of rapid growth. In order to ensure their own technical strength and product competitiveness, these chip design giants are opening up new product lines: Qualcomm has begun to strengthen the automotive, AR / VR business; NVIDIA has pushed the data center strategy of GPU+CPU+DPU, and also acquired Arm; AMD; Acquisition of Xilinx to strengthen FPGA and so on.

For the chip design industry, on the one hand, emerging technologies such as 5G, artificial intelligence, and big data are developing rapidly, and the performance and power consumption requirements of chips continue to increase. But on the other hand, Moore's Law is currently facing a bottleneck, and the cost of chip design for advanced processes continues to increase. Therefore, only a large enough chip market can accommodate advanced process chips, and only industry leaders have the motivation and ability to iterate on products, which has prompted the emergence of the oligopolistic market and the phenomenon of chip design companies.

In the future, as countries strengthen their awareness of ensuring their own semiconductor supply, they will be more alert to mergers and acquisitions of semiconductor giants. In the post-Moore era and the post-epidemic era, the chip design industry, which has already shown oligopolistic competition, may enter a new node.

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