Semiconductors are everywhere. As electronic devices proliferate, semiconductor companies continue to prosper. In fact, these computer chip companies are among the most successful companies in the world.
While some of these semiconductor companies are household names, marketing its technological prowess to consumers, most semiconductor companies are relatively unknown. Because semiconductors are hidden away in phones, tablets, and computers, these companies are business-to-business (B2B) companies that quietly do business with companies that manufacture devices. Still, the names on our top semiconductor companies list are giants in the industry.
Below are 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: $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. While perhaps best known for its popular Samsung Galaxy phones and smart televisions, the company also creates semiconductors. In fact, Samsung developed the world's first 40-nanometer
dynamic random-access memory or DRAM. In 2018, Samsung began building its EUV semiconductor line in Korea, expanding mass production with semiconductor plant openings in 2017 and 2014.
Revenues continue to rise for this stock, and a glance at the past four quarters shows that the rise is steady. In fact, Samsung's share price doubled from 2015 to 2019 with strong growth.
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.
While it used to be the top semiconductor company by sales, Intel has faced stiff competition from the U.S. and abroad, such as from the number-one Samsung.
Wells Fargo rates the stock as an “outperform,” and the consensus is that the stock has room to rise, although out of 26 analysts, six do recommend to sell. In addition to the potential for some capital appreciation, the stock was paying a 2.13% dividend in February 2020.
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 was paying a 2.4% dividend as of February 2020.
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
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 4.45% dividend in December 2019, 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.
Especially as wireless carriers and telecommunications companies embrace the coming fourth industrial revolution with 5G, manufacturers like Qualcomm are well-positioned to take advantage of this surge. In fact, Qualcomm Technologies' first 5G modem is "designed to achieve up to 5 Gbps in downlink peak data rate."
This stock has a hefty 2.97% dividend for March 2020. 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 2.96% dividend as of January 2020.
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 much about. However, they are vital to everything from getting to work through automobiles, elevators, and stoplights to communicating with customers, friends, and family with computers, phones, and tablets. As the Internet of Things and the coming 5G become more of society's future 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.