2 WORLDWIDE IC VENDORS OVERVIEW Figure 2-1 provides a breakdown of worldwide IC sales by North American, Japanese, European, and Rest-of-World (ROW) companies for 1975-1996. As can be seen, sales by North American companies were overwhelmingly dominant in the mid-1970Õs. However, by the mid-1980Õs the majority of the worldÕs IC sales were about evenly split between North American and Japanese companies. By 1990, the Japanese had increased their share of worldwide IC sales to 48 percent, but in 1992 JapanÕs economy weakened causing their share to begin falling. A persistent economic slump in the following years coupled with the KoreansÕ success in the MOS memory market caused the Japanese share to continue falling. The Japanese share fell further in 1996 primarily because of yen to dollar exchange rate and the decline in the DRAM market. 80 70% 70 63% 60 50 48% 46% 46% 43% 42% 40 36% 36% Percent 32% 30 27% 20 18% 15%* 13%* 10% 9% 10% 9% 10 8% 6% 7% 2% 2% 2% 2% 0 1975 1980 1985 1990 1995 1996 (EST) Year = North American Companies = European Companies = Japanese Companies = ROW Companies * Korean companies' share was 11 percent in 1995 and 9 percent in 1996. Source: ICE, "Status 1997" 13743T Figure 2-1. Marketshares of Worldwide IC Sales ($) INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-1 Worldwide IC Vendors For the past 21 years European companies have continued to represent between seven and ten percent of worldwide IC sales. Meanwhile, the share of the ROW companies (primarily Korean and Taiwanese) surpassed that of the European companies in 1992, reaching 15 percent in 1995. However, the decrease in DRAM pricing caused the ROW share to decline two percentage points in 1996. A ranking for the worldÕs top ten merchant semiconductor sales leaders in 1996 is given in Figure 2-2. The sales for these companies as a group decreased seven percent during the year. Together, they held roughly 59 percent of the overall semiconductor market. The most notable thing about this chart is that most of the companies that showed a decrease in semiconductor sales for 1996 are heavily involved in DRAMs. Another interesting note is that SGS-Thomson entered the top ten semiconductor rankings for the first time. The 1996 top fifteen worldwide integrated circuit sales leaders are listed in Figure 2-3. 1996 DRAM Share 1996 Total 1996 IC 1996/1995 Rank Discrete of 1995 Company Semi Sales Sales Percent Sales Semiconductor ($M, EST) ($M, EST) Change 1996 1995 1992 ($M, EST) Sales 1 1 3 Intel 17,800 17,800 — 31 — 2 2 1 NEC 10,250 9,200 1,050 –16 39 3 3 2 Toshiba 8,725 6,970 1,755 –18 35 4 4 5 Hitachi 8,350 7,090 1,260 –15 45 5 5 4 Motorola 8,025 6,525 1,500 –7 8 6 7 6 TI 6,750 6,700 50 –14 41 7 6 11 Samsung 6,050 5,800 250 –28 77 8 8 N/A IBM Microelectronics 5,100 5,100 — –11 35 9 9 8 Mitsubishi 4,300 3,550 750 –15 44 10 14 14 SGS-Thomson 4,200 3,590 610 18 — — — — Total 79,550 72,325 7,225 –7 — Source: ICE, "Status 1997" 18072M Figure 2-2. Worldwide Top Ten Merchant Semiconductor Sales Leaders NORTH AMERICAN MERCHANT IC VENDORS Provided in Figure 2-4 is a listing of those North American merchant IC vendors with sales of at least $50 million in 1996. The figure includes sales for both IC manufacturers and fabless IC suppliers. For the manufacturers, IC ÒsalesÓ include all revenue from ICs produced by their own fabrication facilities and by external foundries. Also, sales by the major ASIC firms (e.g., Xilinx, Altera, and LSI Logic) include revenue from sales of software design tools. On average, sales for IC vendors headquartered in North America grew four percent in 1996 compared to 33 percent in 1995. 2-2 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors Rank 1996 Total 1996/1995 Company IC Sales Percent 1996 1995 1992 ($M) Change 1 1 2 Intel 17,800 31 2 2 1 NEC 9,200 –17 3 3 5 Hitachi 7,090 –18 4 4 3 Toshiba 6,970 –19 5 6 6 TI 6,700 –14 6 7 4 Motorola 6,525 –10 7 5 9 Samsung 5,800 –29 8 8 N/A IBM 5,100 –11 9 13 15 SGS-Thomson 3,590 21 10 9 8 Mitsubishi 3,550 –20 11 11 7 Fujitsu 3,225 –20 12 14 13 Philips 3,215 10 13 10 27 Hyundai 3,150 –28 14 18 20 Siemens 2,400 1 15 12 21 LG Semicon 2,400 –33 — — — Total 86,715 –9 Source: ICE, "Status 1997" 20458B Figure 2-3. Worldwide Top Fifteen Merchant IC Sales Leaders Those companies with the strongest sales gains (in percent) for the year are shown in Figure 2-5. Note that the list includes only those companies with sales of more than $100 million thereby making the growth rates more comparable. A close look at the figure reveals two interesting points. First, most of the companies listed in the figure are involved in graphics/multimedia- related ICs, DSPs, and/or communications ICs; and second, nearly two-thirds of them are fabless. Figure 2-6 lists selected North American IC companies and the end-user markets they rely on. Those companies that sell to a balance of computer, communications, and consumer product man- ufacturers are generally more resilient to cyclical fluctuations. Those companies that are heavily dependent on the computer industry have benefited from a booming market for PCs over the past couple of years. At the same time, however, these same companies were very susceptible to hard times during the PC inventory correction period in the first part of 1996. A good example is Cirrus Logic, who in FY96 (ended March 1996) experienced its first annual net loss since its initial public offering in June 1989 (Figure 2-7). Due to the companyÕs reliance on the PC market, it dropped out of the North American top ten ranking for 1996. Only about 20 per- cent of the companyÕs revenues come from sources outside the PC market. Cirrus set a goal to increase that portion to 40 percent by the end of the decade. INTEGRATED CIRCUIT ENGINEERING CORPORATION 2-3 Worldwide IC Vendors 1995 1996/1995 1996 (EST) Company Fabless1 MOS Bipolar IC Total Percent Change MOS Bipolar IC Total 8x8 x 50 — 50 10 55 — 55 Actel x 109 — 109 38 150 — 150 Allegro MicroSystems2 45 136 181 13 51 153 204 Alliance Semiconductor x 222 — 222 –72 63 — 63 Altera x 402 — 402 22 492 — 492 AMCC2 14 37 51 18 16 44 60 AMD 2,315 115 2,430 –20 1,880 75 1,955 AMI 221 — 221 2 225 — 225 Anadigics3 51 — 51 27 65 — 65 Analog Devices2 485 442 927 33 665 565 1,230 Atmel2 634 — 634 69 1,070 — 1,070 Burr-Brown2 60 168 228 1 67 163 230 C-Cube Microsystems x 125 — 125 152 315 — 315 Catalyst x 57 — 57 14 65 — 65 Cherry Semiconductor2 3 96 99 1 6 94 100 Chips and Technologies x 137 — 137 24 170 — 170 Cirrus Logic2,3 1,187 — 1,187 –18 975 — 975 Cypress2 596 — 596 –10 535 — 535 Cyrix x 228 — 228 –34 150 — 150 Dallas Semiconductor 233 — 233 21 282 — 282 ESS Technology x 106 — 106 42 150 — 150 Exar2 x 103 35 138 –20 85 25 110 Gennum — 42 42 19 — 50 50 Harris2 435 90 525 — 435 90 525 Honeywell 52 6 58 3 52 8 60 IBM Microelectronics2 4,815 890 5,705 –11 4,300 800 5,100 IC Works2 43 — 43 16 50 — 50 ICS x 117 — 117 –23 90 — 90 IDT2 689 — 689 –21 545 — 545 IMP 70 — 70 17 82 — 82 Intel2 13,590 — 13,590 31 17,800 — 17,800 ISSI x 149 — 149 –23 114 — 114 Lattice x 185 — 185 8 200 — 200 Level One x 78 — 78 41 110 — 110 Linear Technology2 98 230 328 16 130 250 380 LSI Logic 1,268 — 1,268 1 1,280 — 1,280 1 A company is considered fabless if the majority of its wafers are manufactured by independent foundries. 2 BiCMOS ICs included under MOS. 3 GaAs ICs included under MOS. Source: ICE, "Status 1997" 9998AA Figure 2-4. North American CompaniesÕ IC Sales (³$50M, $M) 2-4 INTEGRATED CIRCUIT ENGINEERING CORPORATION Worldwide IC Vendors 1995 1996/1995 1996 (EST) Company Fabless1 MOS Bipolar IC TotalPercent Change MOS Bipolar IC Total Lucent Technologies2 1,450 230 1,680 25 1,840 260 2,100 Maxim2 345 — 345 23 425 — 425 Micrel2 47 6 53 26 60 7 67 Micro Linear2 x 18 39 57 –7 21 32 53 Microchip Technology 273 — 273 14 310 — 310 Micron 2,705 — 2,705 –36 1,740 — 1,740 Mitel Semiconductor 68 — 68 3 70 — 70 Motorola2 5,797 1,455 7,252 –10 5,225 1,300 6,525 National2 1,164 1,140 2,304 –2 1,110 1,150 2,260 Oak Technology x 212 — 212 –31 146 — 146 OPTi x 164 — 164 –27 120 — 120 Orbit Semiconductor 62 — 62 21 75 — 75 QLogic x 50 — 50 26 63 — 63 Raytheon Semiconductor2,3 37 65 102 –2 50 50 100 Rockwell Semiconductor3,4 760 — 760 97 1,500 — 1,500 S-MOS Systems x 190 — 190 –5 180 — 180 S3 x 316 — 316 42 450 — 450 Sierra Semiconductor x 189 — 189 –1 187 — 187 Silicon Storage Technology x 38 — 38 150 95 — 95 Silicon Systems2, 5 205 170 375 –47 125 75 200 Standard Microsystems 142 — 142 37 195 — 195 Symbios Logic 520 — 520 11 575 — 575 Texas Instruments2,3 5,995 1,805 7,800 –14 4,900 1,800 6,700 Trident Microsystems x 139 — 139 29 180 — 180 TriQuint3 46 — 46 26 58 — 58 Unitrode2 10 106 116 12 16 114 130 Vitesse3 47 — 47 53 72 — 72 VLSI Technology 720 — 720 — 720 — 720 VTC — 166 166 5 — 175 175 Xicor 114 — 114 12 128 — 128 Xilinx x 520 — 520 9 565 — 565 Zilog 265 — 265 13 300 — 300 Others 1,525 125 1,650 –9 1,400 100 1,500 Total 53,105 7,594 60,699 4 55,621 7,380 63,001 1 A company is considered fabless if the majority of its wafers are manufactured by independent foundries.