Semiconductors in 2019 – HiSilicon reaps the spoils of (trade) war with the US

In 2019 Intel regained the top spot amongst chip slingers, with last-year’s number one Samsung getting burnt by crashing memory prices, but real winner of 2019 was HiSilicon whose revenue jumped by almost 30% as American competitors were cut off from their biggest Chinese customer.

Placing that customer (Huawei) on the US “Entity List” was supposed to put the Chinese government into a supplicant mood in trade negotiations. However, the immediate impact has been to push Huawei into looking outside the US for alternative silicon suppliers , with wholly-owned HiSilicon at the top of the list. HiSilicon isn’t the only Chinese semiconductor company benefiting from the lack of American competition; Huawei has been throwing money at local outfits to spur development of replacement chips, but the Hauwei smartphones leaping off Chinese shelves are largely full of HiSilicon chips.

The US import tariffs aren’t, therefore, having much of an impact on semiconductor shipments, at least not yet. US consumers might not want Huawei smartphones, and US companies might shy away from DJI drones, but everything else made in China is selling just fine.

Despite that, the overall market for semiconductors is down almost 12% thanks largely to the oversupply of memory but, importantly, the non memory market was also down almost 2% which is not surprising given that production of smartphone, servers, traditional PCs and ultramobiles all declined and these four applications alone accounted for 48% of the chip market in 2018. Amongst the top 25 semiconductor vendors only five managed growth in 2019. HiSilicon was the standout, but Sony had a very good year too (26% growth, CMOS image sensors and time-of-flight). Xilinx did alright, with 11% growth driven by adoption of FPGAs, while AMD and MediaTek also managed to grow slightly (4%, and .3% respectively).

At the top end of the chart the crashing memory prices pushed Samsung to second place behind Intel, but SK hynix was hit hardest of all with revenue down by 38%. . None of this should be terribly surprising; my colleague Andrew Norwood predicted just this when Samsung took the top spot in 2017, and even got the timing right. The good news, for Samsung and its ilk, is that Andrew reckons memory is swinging back. NAND pricing is already going up and DRAM pricing will surge from in the second half of 2020. That won’t, apparently, be enough for Samsung to recapture the crown in 2020, but 2021 could be a different story.

Lots more details are available in our Market Share Analysis: Semiconductors, Worldwide, Preliminary 2019.