South Korean giant Samsung Electronics has snatched the crown of the largest chipmaker in the world from Intel Corporation (NASDAQ:INTC).
Samsung announced its quarterly earnings report a few days ago, in which it revealed that its processor business managed to hit the $15 billion revenue mark and an operating income of $7.2 billion. Meanwhile, Intel also reported its quarterly earnings, revealing the revenue figure at $14.8 billion while its operating income was $3.8 billion. Samsung thus took the crown in terms of income and operating revenue. Samsung managed to outshine Intel by offering a diverse range of chips while Intel maintains its focus on processors for computers.
Samsung also shining in the memory business
Another reason that Samsung secured the top spot is due to the fact it made significant gains from its memory business. The Korean firm has been making memory chips for all sorts of devices including data centers, PCs, phones and IoT devices. Intel recorded the fastest growth in the memory business but it is still dwarfed by Samsung. The latter’s memory business is valued at $874 billion with as much as 58 percent growth year over year.
“Memory is on fire and the getting is good right now, but what happens next year?” stated Stacy Rasgon, an analyst at Bernstein Research.
Rasgon pointed out that the memory business is cyclical, meaning it is characterized by seasons of high and low supply. The prices are currently high due to the limited supply, though prices will most likely go down once the supply tries to match the demand. Both Intel and Samsung announced that they plan to boost the production of new memory chips. Samsung plans to invest $18.6 billion to boost the manufacturing capacity in South Korea.
Analysts expect the prices of the memory chips to continue going down in the future once supply increases. As for the processor business, Samsung has gained significant ground especially due to the chips that it makes for the mobile market which is huge.
Intel stock closed the latest trading session on Friday at $35.31 after a 0.97 percent gain from the previous close.
