Global Semiconductor Industry Three-Way Battle
TSMC's 1Q Operating Profit Rises 17%, Claims Top Spot
Intel Performs Well Excluding Litigation Costs
Samsung Remains '3rd' in 1Q Following Last Year
[Asia Economy Reporter Suyeon Woo] During the 2018 supercycle, Samsung Electronics, which was the global semiconductor industry leader, has fallen behind in competitiveness in the first quarter of this year when the second supercycle began, widening the gap with the 1st and 2nd place companies TSMC and Intel. This contrasts with TSMC, which was ranked 3rd in 2018, achieving a 17% increase in operating profit in the first quarter of this year compared to the previous year and taking the top spot.
On the 22nd (local time), Intel announced that its first-quarter revenue this year decreased by 1% year-on-year to $19.7 billion, and operating profit dropped by more than 40% to $3.73 billion. Net profit was recorded at $3.4 billion, down 41%. Although revenue was similar to the previous year, Intel explained that profits decreased due to increased one-time costs for patent litigation provisions.
Considering Samsung Electronics' preliminary first-quarter results (estimated semiconductor division) and TSMC's operating profit, comparing the three companies' operating profits converted to Korean won shows that in the first quarter of this year, TSMC posted the highest operating profit at 5.9 trillion won (150.5 billion Taiwan dollars), followed by Intel at 4.1 trillion won ($3.73 billion), and Samsung last at 3.5 trillion won (estimated).
In terms of revenue, integrated device manufacturers (IDMs) Intel and Samsung Electronics have the advantage, but it is important to note that TSMC showed rapid growth in operating profit, which reflects actual profitability. The operating profit margin for the first quarter is estimated at 18.8% for Intel, around 19% for Samsung, and a remarkable 41.5% for TSMC.
During the 2018 supercycle, Samsung enjoyed a boom by ranking first in both revenue and operating profit. In 2018, TSMC's operating profit was 15.3 trillion won (383.7 billion Taiwan dollars), less than half of Samsung's 44.6 trillion won. However, starting in 2019, the operating profits of the two companies became similar at around 14 trillion won, and in 2020, TSMC began to surpass Samsung.
In the first quarter of this year, TSMC overtook both Intel and Samsung to achieve the top spot in operating profit. TSMC, which operates only the foundry business, has surpassed IDMs in terms of profitability. During the same period, Samsung had to bear losses due to the suspension of operations at its Austin plant in the U.S., and Intel's performance faltered due to low-price orders.
Based on this confidence in performance, TSMC has announced an aggressive investment plan exceeding 100 trillion won over three years. Intel also declared a return to the foundry business, which is expected to improve profitability, and announced a large-scale investment plan. On the other hand, concerns are emerging that Samsung's gap with them may widen further due to delays in facility investment and M&A (mergers and acquisitions) plans.
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