In this article, we discuss the 5 largest chip producers in the world. In order to read our detailed analysis of the chip manufacturing industry, its history, performance, and outlook for future growth, go directly to 12 Largest Chip Producers In The World.
5. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 69
Market Cap: $186.79 billion
Advanced Micro Devices, Inc. (NASDAQ:AMD) makes graphic processing chips, microprocessors, motherboard chipsets, and embedded processors for personal computers, servers, and workstations. Its main clients include Google, Twitter, Microsoft, Hewlett Packard Enterprise, Lenovo, and Dell. In November 2021 the firm also signed Meta Platforms Inc (NASDAQ:FB) as a customer for its EPYC data center chips, which are used for high-performance functions such as cloud computing or inside large enterprises, and which cut power usage by around 25%.
On March 15, Advanced Micro Devices, Inc. (NASDAQ:AMD) unveiled the world’s most advanced desktop gaming processor, the AMD Ryzen 7 5800X3D processor, which delivers 15% more gaming performance compared to processors without stacked cache technology. In 2022, Advanced Micro Devices, Inc. (NASDAQ:AMD) plans to launch 5nm Zen 4 CPUs in 2022, which could include an integrated RDNA 2 GPU, to allow AMD to compete against Intel and Nvidia in CPUs and GPUs simultaneously. In the first half of 2022, industry analysts expect Advanced Micro Devices, Inc. (NASDAQ:AMD) to continue to take market share from rival Intel in server chips.
On February 24, Advanced Micro Devices, Inc. (NASDAQ:AMD) announced that its board of directors had approved an $8 billion share repurchase program, with company CEO Lisa Su noting “With our strong financial performance, we are able to increase investments to drive long-term growth while returning additional value to our shareholders.”
Advanced Micro Devices, Inc. (NASDAQ:AMD) recorded revenue of $16.43 billion for 2021, a 68.33% increase from 2020. As of March 25, the firm’s shares have gained 54.59% in the last 12 months, and 10.64% in the last six months. In the fourth quarter, Fisher Asset Management upped its stake in Advanced Micro Devices, Inc. (NASDAQ:AMD) by 27%, to almost 20 million shares valued at $2.87 billion.
Carillon Tower Advisers, an investment firm, discussed Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q4 2021 investor letter, stating:
“Advanced Micro Devices (AMD) supplies semiconductor chips for central processing units (CPUs) and graphic processing units (GPUs). The firm has been gaining share against its primary competitor in the datacenter server CPU space, as this rival has been unable to match the design and manufacturing capabilities of AMD and its partners. Investors are also looking forward to the closing of the previously announced merger with a semiconductor manufacturer that is another one of the portfolio’s holdings. The merger will increase AMD’s capabilities in the Field Programmable Gate Array (FPGA) chip space, and the combined company should possess the potential to win additional market share in the datacenter chip market.”
4. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 72
Market Cap: $197.00 billion
Intel Corporation (NASDAQ:INTC) is a chip-maker based in California which develops computer processors, graphic cards, motherboard chipsets, and other related computing products. Its list of main clients includes HP, Dell and Lenovo. The firm also created the world’s first metal oxide semiconductor, and is behind the x86 microprocessors which are used by most personal computer devices.
In March, Intel Corporation (NASDAQ:INTC) announced that it would invest over €80 billion in the European Union over the next ten years, in order to bring the most advanced tech to Europe and create a next-gen European chip ecosystem, whilst also addressing the requirement for a more diversified and resilient supply chain. Under this plan, €17 billion will be spent towards the development of a semiconductor fab mega-site in Germany, which will also be subsidized by public funding. This site will see construction commence by 2023 and production start by 2027. Intel will also create a new R&D and design hub in France, and invest in various business endeavors in Ireland, Italy, Poland and Spain.
In February, Intel Corporation (NASDAQ:INTC) agreed to acquire Tower Semiconductor for $5.4 billion. The Israeli firm is a leading foundry for analog semiconductor solutions, and its acquisition will help Intel become a major provider of foundry capacity around the world.
Intel Corporation (NASDAQ:INTC) launched a fully vertical, standalone foundry business called Intel Foundry Services (IFS) in March 2021, as part of its vision to become a major provider of semiconductor foundry services in the U.S and Europe. Intel plans to tap into the Foundry business, which will have a $100 billion addressable market by 2025, to diversify semiconductor foundry manufacturing capacity away from Asia to ensure a secure and sustainable supply chain for the United States and the rest of the world.
Intel Corporation (NASDAQ:INTC) saw its revenue for 2021 come in at $79.02 billion, an increase of 1.49% year-over-year. The firm announced in February that it expects year-over-year revenue growth of 5-9% in 2023 and 2024, and sees it increasing to 10%-12% by 2026.
Baupost Group was the top shareholder of Intel Corporation (NASDAQ:INTC) in our database at the end of Q4 2021, with roughly 18 million shares valued at $928.9 million.
Here is what Third Point Management had to say about Intel Corporation (NASDAQ:INTC) in its Q4 2021 investor letter:
“2021 was a highly productive year for Intel‘s new CEO, Pat Gelsinger. Despite the stock’s tepid results, we see a compelling, underappreciated fundamental story. Intel’s “brain drain” – a key part of our thesis when we first sought to help the company confront its long-time underperformance – appears to be reversing. Since joining Intel, Mr. Gelsinger has not only brought back prominent Intel former employees but has also attracted talents from competitors such as AMD, Nvidia, Apple, and, most recently, Micron’s stellar Chief Financial Officer, David Zinsner.
We are encouraged by Intel’s aggressive investment plan, including a recently announced fabrication plant in Ohio and acquisition of Tower Semiconductors. We knew from the start that Intel’s turnaround would be complex and lengthy, and we have been pleased to see Mr. Gelsinger sacrifice near-term earnings for long-term growth.
Finally, after a series of blunders across its PC and Server product lines, Intel is finally receiving good reviews for one of its upcoming processors: Alder Lake. Tom’s Hardware, a preeminent hardware publication, called Alder Lake “a cataclysmic shift in Intel’s battle against AMD’s potent Ryzen 5000 chips.” While this is just one product across a broad lineup, and given it will take time to achieve leadership across them all, we are encouraged by these tangible signs of progress under Mr. Gelsinger’s leadership. With talent returning, an improving product suite, and a willingness to invest for growth, we believe Intel’s prospects have turned the corner. We expect that the company’s upcoming analyst day will be an ideal time for Mr. Gelsinger to articulate the progress he has made and begin to reset expectations for the company.”
3. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 62
Market Cap: $249.60 billion
Broadcom Inc. (NASDAQ:AVGO) ranks next on our list of the biggest chip producers in the world. The California-based firm offers a diverse portfolio of semiconductor and software products that are used in wireless connectivity systems, routers, processors, fiber optics, and data center switches. The firm also provides set-top box system-on-chips (SoCs) and fiber channel networking products used in data centers. Broadcom Inc. (NASDAQ:AVGO) deals in infrastructure software solutions which are used by enterprises to build, manage, and secure complex digital ecosystems. The main clients of Broadcom Inc. (NASDAQ:AVGO) include IBM, Linksys, Logitech, Dell and Cisco Systems, along with many others.
On February 24, Broadcom Inc. (NASDAQ:AVGO) announced its broad, industry-leading PCIe Gen 5.0 portfolio, which is setting the foundation for the ecosystem to build high-performance, next-generation servers. Broadcom’s switches and custom silicon products known as PCIe Gen 5.0 SerDes are now available to cloud providers, original equipment manufacturers (OEM) and original design manufacturers (ODM) and are currently undergoing testing for wide-scale interoperability.
Baird analyst Tristan Gerra maintained an ‘Outperform’ rating on Broadcom Inc. (NASDAQ:AVGO) shares on March 4, noting that demand remains strong and is expected to accelerate year-on-year this quarter. The growth drivers for the firm include enterprise IT, hyper-scale and cloud, switches upgrades in networking, storage network connectivity, and next-generation PON and DOCSYS in broadband. JPMorgan analyst Harlan Sur has an ‘Overweight’ rating on Broadcom Inc. (NASDAQ:AVGO), and sees the firm’s business continuing to accelerate. He sees Broadcom’s solid earnings results and future guidance reflecting the strong leverage it has in its end markets and its strong product cycles.
As of March 25, shares of Broadcom Inc. (NASDAQ:AVGO) have gained 30.46% in the last 12 months, and 24.57% in the last six months. The firm recorded $27.45 billion in fiscal 2021 revenue for the period ending October 31, a 14.91% increase year-over-year.
Richie Capital Group talked about Broadcom Inc. (NASDAQ:AVGO) in its Q4 2021 investor letter. Here’s what the fund said:
“Broadcom (AVGO – up 36.5%) – The semiconductor device manufacturer reported an outstanding Fiscal Q4. Results (and guidance) exceeded Wall Street analyst expectations, and the company raised its dividend by 14% and announced a new stock-repurchase program. Semiconductor related revenue grew 17% while software revenue grew 8%. On the negative side, it was rumored that Apple, their largest customer, is making plans to develop their own wireless chips. This would be a blow to Broadcom. However, AVGO has a $15 billion contract with Apple that is good through 2023 and includes radio frequency parts such as amplifiers, filters and switches.”
2. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 72
Market Cap: $533.22 billion
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the largest semiconductor foundry in the world, making chips for the biggest global tech companies. The Taiwanese firm is a pure-play foundry and is known as the ‘backbone’ of the semiconductor industry, as companies including Apple, Intel, Qualcomm and NVIDIA outsource their chip manufacturing to Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM).
In January, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) outlined plans to spend a record $40-$44 billion in capital expenditures for 2022, up from around $30 billion in 2021. This will further solidify its position as the largest foundry in the world. In 2021, TSMC saw its revenues generated by sales to Apple increase 20% year-on-year to reach $14.3 billion, approximately 26% of the firm’s total wafer revenue for the year. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) will also manufacture Apple’s new M1 Ultra SoC chip using a 5nm process node and advanced packaging technology. It supplies industry-leading 5 nano-metre chips to Apple, and is working on introducing a 3nm chip by 2023.
Automotive firms also outsource their chip manufacturing to Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and these orders are expected to rise at a faster-than-previously-predicted pace. TSMC’s dominant position in the market will see it attract orders for AI chips used in autonomous driving from companies such as Tesla, NVIDIA, Qualcomm, and Intel. In the 7/5nm foundry process segment, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has commanded a market share exceeding 90%.
L1 Capital, an investment firm, talked about Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its third quarter 2021 investor letter. Here’s what the fund said:
“Even though they are not majority State owned and we would expect many of China’s technology champions to continue to grow strongly, outcomes for shareholders may be unsatisfactory… The Fund has retained its investment in Taiwan Semiconductor Manufacturing Company (TSMC) which is well placed to maintain its global leadership in semiconductor manufacturing. Due to geopolitical risks, we limit the position size of TSMC in the Fund.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 110
Market Cap: $665.75 billion
NVIDIA Corporation (NASDAQ:NVDA) deals in the provision of graphic processing units (GPUs) to consumers for high-performance computer usages such as gaming, design and editing. The crypto boom has also led to more people using NVIDIA’s graphic cards to mine cryptocurrencies. The firm’s portfolio of computing products include the Quadro series of video cards for professional graphics, the Tegra series used in cellular phones, and the nForce series for multimedia functions.
As the metaverse hype picks up, NVIDIA Corporation (NASDAQ:NVDA) is the forefront beneficiary of this trend as computers utilize bigger graphic chips to simulate digital worlds in complex detail. The firm is also supplying the main ‘brain’ chip for use by NIO’s new electric vehicle called ET7. The Chinese automaker is expected to release the highly autonomous EV in the first quarter of 2022. NVIDIA Corporation (NASDAQ:NVDA) also unveiled its own CPU called Grace in April, enabling it to directly challenge CPU giants such as Intel and AMD for CPU market share. Amazon uses NVIDIA chips in its Amazon Web Services data centers as well.
JPMorgan analyst Harlan Sur sees NVIDIA Corporation (NASDAQ:NVDA) as “1-2 steps ahead of its competitors.” He reiterated an ‘Overweight’ rating on the company’s shares with a $350 price target on March 23. The analyst noted that with its leading silicon hardware and software platforms, along with a strong ecosystem, Nvidia is well-positioned to enjoy growth from major secular trends in artificial intelligence, high performance computing, gaming, and autonomous vehicles. The firm has also recently announced a next generation Hopper accelerated computing architecture, as well as a next-gen H100 chipset that targets datacenter acceleration.
As of March 25, NVIDIA Corporation (NASDAQ:NVDA) has seen its share price jump 115.69% in the last 12 months, and 27.85% in the last six months. Revenue for the 12-month period ending January 31, 2022 stood at $26.91 billion, jumping 61.4% year-on-year.
Here is what Vulcan Value Partners had to say about NVIDIA Corporation (NASDAQ:NVDA) in its Q4 2021 investor letter:
“NVIDIA Corp. was a material contributor during the quarter. We have discussed NVIDIA at length in previous quarters. Its products are at the intersection of a number of important computing trends including the movement to the Cloud, artificial intelligence, autonomous vehicles, edge computing, gaming, and now, the Metaverse. The company continues to outperform expectations, growing its revenue and free cash flow significantly throughout 2021, and in turn, its value is compounding quickly.”
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