Samsung challenging Intel for market leadership

Intel is facing increasing competition in the worldwide semiconductor industry — but not from traditional rival Advanced Micro Devices.

Samsung Electronics came closer to challenging Intel’s leadership position in the global chip market in 2010 than any company had in more than a decade, according to a report released Tuesday by the research firm IHS iSuppli.

Last year’s final market share rankings came in showing Samsung, which is based in South Korea, in the No. 2 position with a 9.2 per cent share of global chip revenue, up from 7.6 per cent in 2009. That means Samsung was just 4.1 percentage points behind long-time market leader Intel, which is based in the U.S.

By contrast, 10 years ago Intel’s market share of 14.9 per cent was more than three times that of Samsung, which came in at 3.9 per cent. In 2001, Samsung was in No. 5 position in the global semiconductor market.

In the past decade, Intel’s market share has hovered between 11.9 per cent and 14.8 per cent.

“The rise of Samsung is one of the biggest stories of the last decade in the worldwide semiconductor market,” iSuppli analyst Dale Ford said in a written statement.

“When experts discuss competition for Intel, they almost always focus on AMD. While it is true that AMD is Intel’s major competitor in the microprocessing unit market, Samsung is the primary rival of Intel for overall semiconductor market share,” Ford said.

So what has caused Samsung to gain so much on Intel? The company’s growth largely has been based on its “booming” sales of memory integrated circuits, according to iSuppli.

The research firm also noted that the biggest growth driver in the memory segment of the semiconductor market last year was dynamic random access memory (DRAM), which increased by 75 per cent. The other major segment of the memory market, NAND flash, grew 38.6% for the year.

Samsung was perfectly placed for growth since the company is the leading worldwide supplier of DRAM and NAND. Thanks to that positioning, the company showed a 59.1 per cent increase in semiconductor revenue last year, “massively” outperforming the overall chip market.

Samsung is well positioned since it manufactures its own tablet chips, as well as chips specifically for the iPad and iPad 2.

On Tuesday, Intel reported growth in revenue and income for the first quarter of 2011, driven by the addition of new products and strength in the enterprise market.

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Jim Love, Chief Content Officer, IT World Canada

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