Something momentous happened quietly in the global semiconductor industry this week, and it deserves a bit of attention.
Taiwan Semiconductor Manufacturing Co. topped Intel Corp. in market value. Bloomberg's Emma O'Brien, Jake Ulick and Gao Yuan captured the moment in a Chart of the Hour that shows TSMC's long march upward to close the gap on Intel, reproduced here.
To understand how Chipzilla was surpassed one need only to look at the sandpits in which the two companies play. Despite attempts to get into mobile phones and other consumer electronics, Intel remains firmly penned in the personal computer and server businesses. TSMC roams more freely because it makes chips on spec for clients including Apple Inc., Qualcomm Inc., Nvidia Corp. and dozens more.
Clearly mobile telephony has been the story of the last decade, boosted by the release of the iPhone and the advent of the Android operating system. As these devices grew in power, more and more chips were being installed in them.
Actually, you could argue that it happened the other way around: Advancing semiconductor technology enabled faster phones with better screens. Meanwhile, the PC market has declined, and the processing power inside each box hasn't climbed at the same rate as in mobile.
The result has been rising profits at TSMC and declines at Intel, to the point where the Taiwanese chipmaker to the stars has overtaken the world's most powerful (and feared) semiconductor manufacturer.
Nothing lasts forever, though. Mobile phone sales are starting to slow, while connected cars and internet-of-things devices have yet to fill the gap. Intel is keen to jump into both arenas -- it has an IoT business group and recently bought an automotive chip designer, Mobileye NV -- while TSMC is poised to cater to numerous clients trying to tap into that same future. And let's not forget Samsung Electronics Co., which offers a suite of products from chips to end devices.
Remaining at the top will depend not on strength but on adaptability to change.
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