A new normal is dividing the global chip industry

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The divide between the biggest chip makers and those highly dependent on demand for mainstream products is set to worsen.

are at a record high, and a global economic downturn is unlikely to change that picture. But an increasingly tense geopolitical environment and continued supply-chain friction is dividing the largest from other semiconductor manufacturers, which could impact how well they survive.

Inventory days, a measure of how long it takes to sell and replace stockpiles, have never been higher at dedicated chip foundries TSMC, United Microelectronics and Semiconductor Manufacturing International. Those three companies are ranked number one, three and five in global made-to-order market share — accounting for 67% of the total. Data from Samsung Electronics, the second largest foundry, isn’t analysed here because the company doesn’t provide data for its contract chip business.

Digging deeper, we can see that manufacturers outside TSMC and possibly Samsung are still holding on to higher stockpiles as sales slow. At the end of June, inventory at TSMC, which accounts for around 55% of the foundry market, was equal to 40% of that quarter’s revenue. Its rivals collectively had a figure of 57%.

 

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