Companies in the semiconductor industry are in a constant race to build smaller, faster, and cheaper chips. The industry, which began in 1960 when fabricating semiconductors became feasible, grew from a $1 billion industry in 1964 to a $412 billion industry by the end of 2019. The semiconductor industry is dominated by some very large players with distinct niches and advantages--including Advanced Micro Devices (AMD).
Advanced Micro Devices Inc. has historically been one of the significant players in the semiconductor industry. The company has seen its market capitalization decline precipitously from the highs it reached during the dot-com bubble in the late 1990s and again in 2005 when analysts and market participants perceived the company as an innovator in the industry. AMD generated net income of $341 million in 2019 and a gain of 80.01% in its share price. Here, we take a look at four AMD competitors.
Intel Corporation (INTC) is the largest pure-play competitor to AMD. The company creates, produces, and sells integrated digital technology platforms all over the world. As the largest player in the space, the company has historically invested heavily in research and development (R&D). For the fiscal year ending in December 2019, the company had $72 billion in annual revenue and gross margins of 58.6% overall. The company generated a record $33.1 billion cash, and paid dividends of $5.6 billion. Intel earned $4.71 per share. As of May 31, 2020, the company had a market cap of $266.5 billion and a price-to-earnings (P/E) ratio of 12.18.
International Business Machines Corporation (IBM) is a diversified technology products and services company, and semiconductors represent one piece of the company's overall business. IBM is a global leader in technology R&D, and it continues to invest a substantial amount of money in chip technology. In July 2019, IBM also finalized its acquisition of Red Hat for $34 billion as it continued to look into open source, hybrid cloud solutions. IBM had $77.1 billion in revenue for the fiscal year that ended in December 2019, which included its total cloud revenue of $21.2 billion. In addition, its consolidated diluted earnings per share was $10.56. This was an 11% increase year over year compared to $9.52 for 2018. IBM generated non-GAAP earnings per share (EPS) of $12.81 for the fiscal year. As of May 31, 2020, the company had a market cap of $110.9 billion and a P/E ratio of 12.37.
NVIDIA Corporation (NVDA) is a semiconductor company specializing in chips used primarily in graphics and gaming. Its Tegra division produces chips that integrate a computer’s circuitry onto a single chip. For the fiscal year 2019, the company had $11.72 billion in revenues--up 21% from the previous year. The company's non-GAAP earnings per diluted share were $6.64, and had impressive growth margins of 61.2%. As of May 31, 2020, the company had a market cap of $218.34 billion and a P/E ratio of 66.28, which is one of the highest in the large-cap semiconductor space.
Analog Devices Inc. (ADI) is a semiconductor company that creates, produces, and sells a suite of products that use analog, digital, and mixed-signal processing technology to manufacture integrated circuits and other solutions for industries and consumers. The company serves niche markets in the automotive and communications industries and sells its products worldwide. For the fiscal year 2019, the company had $6 billion in revenue and ended its fourth quarter with gross margins of 65.3%. In addition, Analog Devices had an operating cash flow of $2.3 billion and free cash flow of $2 billion. As of May 31, 2020, the company had a market cap of $41.61 billion and a P/E ratio of 37.88.