Semiconductors are essential components of the devices that most people use daily, including smartphones, electric vehicles, and even satellites. However, a few companies dominate the global market for their production. This concentration affects business dynamics and has significant geopolitical implications, particularly highlighted by the increasing technological rivalry between the U.S. and China.
The impact of this dominance is clearly illustrated in the Visual Capitalist chart below:
Nvidia. The chart shows the stock market data for publicly listed companies as of Dec. 30, 2024. Unsurprisingly, it reveals Nvidia’s leading role, with a market capitalization of $3.4 trillion. The company specializes in creating GPUs for video games and servers and recently unveiled its new generation of graphics cards.
Nvidia is a cornerstone of the U.S. semiconductor industry, which also includes major players like Micron, AMD, Qualcomm, and Texas Instruments. In the chart, you can easily see how Nvidia’s impact on the global market surpasses that of the vast majority of other companies combined.
TSMC. Taiwan’s TSMC also plays a significant role in the semiconductor market. Thanks to TSMC, Taiwan holds the second-largest market share worldwide. By the end of 2024, the company became one of only three companies to surpass the trillion-dollar mark. Now, it aspires to grow further.
Moreover, TSMC is the world’s leading manufacturer of semiconductors for other companies. As such, it produces chips designed by other companies, with Apple being a prime example. While Apple designs its chips, TSMC is responsible for their production.
Broadcom. The third major player in the semiconductor industry is Broadcom. Originally a semiconductor division of HP, Broadcom separated from Hewlett-Packard in 1999. Over the years, it’s established itself as one of the most important designers, developers, and manufacturers of semiconductors globally.
Similar to TSMC, Apple is a crucial partner for Broadcom, highlighted by a collaboration agreement announced in 2023, which aims to develop at least 5G modems.
European companies. The landscape of European semiconductor manufacturing is becoming increasingly defined. One notable player is ASML, which, intriguingly, doesn’t produce chips itself. Instead, it manufactures the most advanced machinery used to create chips. ASML supplies these critical machines to major manufacturers, positioning itself as a key player in the ongoing trade conflict between the U.S. and China.
Germany’s Infineon and the United Kingdom’s ARM are also key players in the semiconductor industry. ARM develops processors based on its proprietary architecture to compete with major companies like Nvidia, Qualcomm, AMD, Intel, and Samsung. Recently, the European Union introduced the European Chips Act to enhance Europe’s standing and prevent it from becoming a minor player in the semiconductor market.
Intel’s decline. Intel currently occupies a small niche in a highly competitive landscape. With a market capitalization of $85 billion, the company isn’t just lagging behind Nvidia. It’s also fallen far from its former dominance over AMD. Intel recently faced severe criticism. Its biggest crisis in decades culminated in the departure of CEO Pat Gelsinger at the end of 2024 after the company failed to capitalize on the AI boom. It’ll be interesting to see what the company’s ambitious plans will yield in 2025.
What about China? While the dominance of U.S., Taiwanese, European, and South Korean tech giants is undeniable, it’s also important to consider China’s role. In recent years, the U.S. and China have been involved in a trade war. Additionally, Chinese companies have been banned from acquiring Western technology. However, the Asian nation has made significant strides in boosting its technology sector.
In this context, Huawei has emerged as a key player, developing GPUs to compete with Nvidia in the AI space. However, SMIC serves as the backbone of China’s semiconductor industry. In fact, SMIC’s role as the leading semiconductor company in China has reignited interest in Huawei’s position in mobile devices. Nevertheless, SMIC ranks 22nd globally, far behind not only U.S. companies but also those from Europe, Japan, South Korea, and, of course, TSMC.
Image | Christian Wiediger
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