Besides leading in semiconductor production, Taiwan is also becoming a new force in chip design to compete with the US.
According to TrendForce's statistics on the world's top chip design companies based on revenue in 2021, there are four Taiwanese companies including MediaTek ranked fourth, Microelectronics ranked sixth, Realtek Semiconductor eighth and Himax Technologies first appeared on the list at 10th place. The remaining six positions are all occupied by US companies.
Over the years, the US has always been a powerhouse in semiconductors with famous names such as Qualcomm, Broadcom, Nvidia, AMD... Meanwhile, 2021 marks the first time that Taiwan has featured in four of the top 10 positions for semiconductor design in TrendForce's ranking, showing its growing presence in this field.
Chip design is considered one of the difficult areas of the semiconductor industry. Advanced design capabilities are a must for high-performance chip development. This model was pioneered by the US in the 1980s and many businesses have poured hundreds of billions of dollars to get it today.
Previously, the US followed the path of owning the design copyright, then ordering production at outsourcing facilities in Asia. The fact that Qualcomm has grown and become a powerhouse in the semiconductor industry since 1985 or Nvidia since 1993 is also thanks to this model.
Meanwhile, Taiwanese companies, previously seen only as subcontractors, are increasingly posing a threat to the US. According to experts, the rapid development of Taiwanese chip designers is partly due to the fact that they have leading domestic outsourcing partners such as TSMC or United Microelectronics Corp (UMC).
In fact, design and production always need to work closely together. “The closer the distance, the faster the project progress because there are no problems with customs procedures, such as border closures causing supply chain disruptions during the recent pandemic.” an expert commented.
According to Nikkei Asia, the strong relationship between semiconductor companies has come into play in the current chip shortage. With a continuous flow of orders from all over the world, TSMC and UMC prioritize Taiwanese design companies, thereby helping partners increase their rankings significantly in the market.
We can see this clearly in the smartphone chip sector, where MediaTek - which has a close relationship with TSMC - overtook Qualcomm to become the market leader earlier this year. According to the financial report for the first quarter of 2022, MediaTek's profit reached 1.13 billion USD, up 30% year-on-year and the highest ever. Meanwhile, revenue jumped 32% to a record $4.8 billion on the back of demand for 5G chips for smartphones.
In fact, the four Taiwanese companies on TrendForce's list all rely heavily on TSMC and UMC. "The compatriot factor has helped Taiwanese chip design companies gain a great advantage over the past time. They have advantages in terms of geography and relationships, from which the process from design to production becomes easier and more efficient" Chris Hung, Deputy Director of Market Intelligence & Consulting Institute commented.
Many American semiconductor companies also have a Taiwanese presence. Seven of the top 10 chip businesses in TrendForce's ranking have leaders from Taiwan. "Their connection to Taiwan could be a link in future mergers or acquisitions," Nikkei Asia predicts.
0 Comments