Strategic Intelligence: Semiconductors Sector Scorecard Q3 2024 Update

AI chips and geopolitics are critical themes for the semiconductor industry and have been given the highest weightings (15%) in the thematic screen of the analyst’s semiconductors sector scorecard. The demand for generative AI capabilities across numerous technologies has put significant pressure on semiconductor companies to develop more advanced and efficient chips to support these applications. However, this pressure has been further complicated by external factors such as the ongoing US-China trade war, which has disrupted supply chains and created uncertainty in the semiconductor market. China’s progress in advanced chips has been severely hindered by the US-imposed restrictions on what both US and foreign semiconductor companies can sell to China. Since August 2024, Chinese tech companies such as Huawei and Baidu have been stockpiling Samsung Electronics’ memory chips for fear of US-imposed export sanctions on Korean companies.

Individual companies monopolize various parts of the semiconductor value chain. For example, ASML is the sole supplier of the extreme ultraviolet (EUV) lithography equipment essential to advanced chip manufacturing. Nvidia and TSMC hold 90% market share in AI chip design and AI chip manufacturing, respectively. This has resulted in concentrated pockets of power with few serious contenders in sight. Longstanding incumbents like Intel and AMD have lost ground, having failed to prepare sufficiently for the generative AI boom. Big Tech companies like Alphabet, Baidu, and Microsoft have started designing AI chips in-house to gain greater self-sufficiency. This could lead to diversification in the design space, although the AI chip foundry market will likely remain a monopoly for the foreseeable future.

Scope

• This sector scorecard provides a top-down, comprehensive outlook for the key players in the semiconductors sector over the next two years, based on the key themes set to transform their industry landscape.

Reasons to Buy

• Companies that invest in the right themes become success stories. Those that miss the important themes in their industry end up as failures.
• The analyst’s thematic research ecosystem is a single, integrated global research platform that provides an easy-to-use framework for tracking all themes across all companies in all sectors. It has a proven track record of identifying the important themes early, enabling companies to make the right investments ahead of the competition, and secure that all-important competitive advantage.
• At the analyst, we have developed a unique thematic methodology for ranking all major companies in all major sectors based on their relative strength in the big themes that are impacting their industries.
• Our thematic engine tags over 180 million data items across six alternative data sets-patents, jobs, deals, filings, social media, and news-to themes. The vast datasets within our thematic engine help our analysts to produce sector scorecards that identify the companies best placed to succeed in a future filled with multiple disruptive threats.