Semiconductors are everywhere. As electronic devices proliferate, the companies that make semiconductors continue to prosper. In fact, they are among the most successful companies in the world.
Because semiconductors are hidden away in phones, tablets, and computers, many semiconductor companies are relatively unknown. They quietly do business with companies that manufacture devices. The names on our top 10 list may not be known to everybody, but they are giants in the industry.
On the other hand, some semiconductor companies are household names. They spend millions of dollars on advertising to make the public aware of who they are.
We selected the top 10 semiconductor companies based on sales. It should be noted that sales are not identical to revenues. Whereas a company may have revenues from sources that don’t include sales of its products, sales are derived from exchanges with customers. All figures are current as of year-end 2019.
Sales: $69.8 billion
Intel Corp. (INTC) is an integrated device manufacturer that designs and manufactures motherboard chipsets, network interface controllers and integrated circuits. The company is headquartered in Santa Clara, Calif., and was founded in 1968 with $2.5 million in funding arranged by American venture capitalist Arthur Rock.
Intel's initial products were memory chips, including the world's first metal oxide semiconductor. Intel's introduction of the Pentium microprocessor in 1993 helped spur a significant expansion of the PC market. Intel supports processors for computer companies such as HP and Dell.
Despite holding on to its #1 position, the company has faced stiff competition from the U.S. and abroad.
Wells Fargo rates the stock as an “outperform,” and the consensus is that the stock has room to rise, although out of 26 analysts, 6 do recommend 'sell'. In addition to the potential for some capital appreciation, the stock pays a 2.14% dividend.
Sales: $75.7 billion
Samsung is a Korean conglomerate that is actually made up of about 70 individual companies. Samsung Electronics makes mobile devices such as smartphones, and it manufactures television sets and appliances. The company also creates semiconductors.
Revenues continue to rise for this stock, and a glance at the past four quarters shows that the rise is steady
3) Taiwan Semiconductor
Sales: $34.2 billion
Taiwan Semiconductor Manufacturing Company (TSM) claims to be the world's largest dedicated independent pure-play semiconductor foundry. Pure-play foundries only fabricate integrated circuits and do not have any in-house design capabilities. Many leading semiconductor companies outsource the manufacturing of their components to Taiwan Semiconductor to cut labor costs while investing capital in research and development.
This company has reported higher revenues in each of the last four years and operating income has been up for each of those years. The stock pays a 2.8% dividend.
4) SK Hynix
Sales: $36.2 billion
This South Korean company makes and sells semiconductor products. It also is involved in automobile electronics, storage, and computing solutions. While it may not be a household name among American consumers, SK Hynix is one of the fastest growing semiconductor manufacturers, and its chips are probably found in some of your newer electronic devices.
5) Micron Technology
Sales: $30.9 billion
Idaho-based Micron Technology (MU) markets semiconductor products on an international basis. Its products are used in computers, consumer electronics, automobiles, communications, and servers. It creates flash RAM products as well as rewritable disc storage solutions.
Sales: $16.5 billion
Broadcom (AVGO) was the source of major news when it was purchased by its rival Avago for $37 billion back in 2015. Their products serve four primary markets: wireless communications, enterprise storage, wired infrastructure and industrial. It manufactures semiconductor devices and analog devices and provides interfaces for computers' Bluetooth connectivity, routers, switches, processors and fiber optics.
Revenues are fairly flat for the past three years, but operating income has almost doubled. Its management is clearly doing something right. With a 4.34% dividend, this stock is a steady investment for the foreseeable future.
Sales: $16.4 billion
Close behind Broadcom is Qualcomm, Inc. (QCOM), which designs and markets wireless telecommunications products and services. Telecommunications companies worldwide use Qualcomm's patented code division multiple access (CDMA) technology, which has played an integral role in the development of a single international standard for wireless communications. Its Snapdragon chipsets are found in many mobile devices.
This stock has a hefty 2.75% dividend. Revenues have been flat over the past four years, and operating income has dropped. However, the dividend appears to be safe, so this is a stock for income-driven investors.
8) Texas Instruments
Sales: $13.9 billion
Texas Instruments Inc. (TXN) designs and fabricates semiconductors for manufacturers worldwide. The company is a major manufacturer of chips for mobile devices, digital signal processors and analog semiconductors, and still manufactures the product it first became widely known for: calculators.
Texas Instruments started out as an oil and gas company in 1930, then focused on defense systems electronics in the 1940s. The Dallas-based company entered the semiconductor business in 1958 and now has more than 40,000 patents in electronics. The company's income, revenues, and cash flow have been consistently higher for the past three years. The stock pays a 2.77% dividend.
This is a steady company in an industry that can have dramatic ups and downs. Analysts view this as an income stock.
Sales: $12.3 billion
Toshiba (TOSYY) is a Japanese electronics company that manufactures consumer products such as televisions PCs and tablets. It also creates systems for industrial companies, railways, security firms, broadcasters, and even elevators.
Toshiba's four-year revenues are down, and its income has dropped. On the other hand, its cash flow is positive, and the company is keeping a lot of cash on hand. This could fuel future growth.
Sales: $11.6 billion
Nvidia (NVDA) is perhaps best known for its line of both consumer and high-end video graphics cards found in computers of all shapes and sizes. These graphics processing units, or GPUs, are popular among computer gamers, digital artists, and those who work with computer-aided design alike. In recent years, the company has also received a bump from cryptocurrency mining, where GPUs have been found to be more efficient at producing digital currencies such as Bitcoin than traditional CPUs. Nvidia has also been working on chipsets for driverless cars, with its Tega processor used in some Tesla cars.
The Bottom Line
Semiconductors are a significant part of modern life that the average person probably doesn’t think about them much. However, they are vital to everything from getting to work (automobiles, elevators, stoplights) to communicating with customers, friends, and family (computers, phones, tablets). As the internet of things becomes more of a reality, every imaginable product will have semiconductors inside to enable communication and networking.
The long-term outlook for the semiconductor industry is arguably bullish as more people upgrade their mobile devices and as new innovations such as self-driving cars, cryptocurrencies, and AI applications take off. Indeed, semiconductor companies should continue to find new customers as they explore these innovations and expand into new world markets.