The most famous line of Tennyson's poem Morte D'Arthur is "The old order passeth, yielding place to new." It is often quoted when a new king, real or metaphorical, is crowned. Last week, Intel and Samsung announced their financial results. Intel grew 6% to $63B for 2017. Samsung's semiconductor business grew to $69B. For over 25 years, since 1992, Intel has been the largest semiconductor manufacturer. Now, Samsung is. Almost as if to rub it in, Samsung also announced a 50:1 stock split. The timing is also symbolic, since Intel was founded 50 years ago in July, so it will not make it to its 50th anniversary in the #1 position. The old order changeth, and Samsung wears the crown. There are two main reasons for this: mobile and memory. Intel When Intel started it was a memory company. There were not enough transistors on a chip to build a processor. The microprocessor was invented by Intel as part of a custom project for the Japanese company Busicom. You can see the product that resulted if you visit the Intel Museum in Santa Clara (see my post The Intel Museum for more details). The first merchant microprocessor was the Intel 4004. Given the specifications for a modern microprocessor, you can have a laugh at the numbers for the 4004: manufactured in 10um (10,000nm the way we talk today), it had 2300 transistors and a clock rate of 0.75MHz. When the Japanese decided to get seriously into semiconductor manufacturing, they focused on memory. It is a good choice since it has very high volume for relatively few products, so doesn't stress design infrastructure and allows a lot of process learning to happen quickly. They learned so quickly that they pretty much drove Intel out of the memory business and they wisely focused on the promising growth area of microprocessors. I consider it one of the most amazing business transitions ever, since usually a major transition like that requires the existing management team to be fired, and the new team to change the strategy. Andy Grove recounted the story in his book Only the Paranoid Survive . This is quoted from memory since I can't find my copy of the book: Andy Grove and Gordon Moore are in Gordon's office. The business is not going well since they are losing a lot of money in memories. There is a board meeting the following day. "What will happen if the board fires us tomorrow?" said Andy. "They'll find a CEO who will get us out of memories." The two men looked at each other. "Why can't we walk out of that door, come back in, and do that ourselves?" They did. Intel has more recently got back into memories. It is still possible that 3D Xpoint (that Intel now calls Optane) will be a big success, but it always seems to be a year away from hitting it big. They are also in flash, too. However, Intel is dominant in microprocessors for PCs and servers, with only AMD occasionally snapping at their heels. A later transition came along that Intel didn't manage so well, namely mobile. Paul Otellini, who won Apple's business for microprocessors in the Macs, said when he retired that Intel passed on the opportunity to supply Apple because the economics did not make sense: The thing you have to remember is that this was before the iPhone was introduced and no one knew what the iPhone would do... At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn't see it. It wasn't one of these things you can make up on volume. And in hindsight, the forecasted cost was wrong and the volume was 100X what anyone thought. The result was that Intel "missed mobile." They had several programs internally, but Arm became the standard for mobile (see my post The Design That Made Arm ). I think it is clear that Intel's acquisition of Mobileye for a big premium, early in the market for autonomous driving, is to make sure they don't "miss automotive." The other way to get into mobile, at least share in some of the semiconductor volume, was to get into the foundry business. Intel tried that, too, with Intel Custom Foundry (ICF). There may be some big customers that have not been announced publicly, but most of their customers seem to be smaller companies that Intel has invested in. Their biggest foundry win was Altera, but Intel liked the product so much they bought the company, so it doesn't really count as foundry anymore. Samsung When Korea decided to get seriously into semiconductors, they started with memory and pretty much drove the Japanese out of the market, in the same way that the Japanse had done to the Americans. China has several memory projects and clearly are hoping lightning strikes a fourth time in the same place. Samsung are, of course, a major memory supplier in both DRAM and flash. A little over 10 years ago, they entered the merchant foundry business. Early last year, they reorganized and made foundry a completely independent business (for more details, see my post Samsung Foundry Forum: Roadmaps ). From a customer's point of view, the ideal foundry company is pure-play, with no product lines of its own. Next best, is that the foundry business really does run independently of other businesses so that they can both deliver foundry and also have products in the same space. A couple of years ago, Apple (#2 in the handset market) was using Samsung as a foundry, at the same time as they competed head-on with the high end of Samsung's Galaxy line. Samsung is the #1 supplier in the world of handsets, with about 30% market share. So they are big in mobile in that sense, and they consume a lot of their own chips. But they are also a major manufacturer for Qualcomm, who supply their Snapdragon chips to a lot of the handset market, especially at the high end. It must be a delicate balancing act, but for someone like Qualcomm, there have really only been two foundries that have proved that they can deliver the most advanced process nodes on a ridiculously steep ramp. It has turned out that mobile has been the big driver of semiconductor over the last few years, including being the big driver of memory. PCs have been shrinking and servers growing, but not as fast as mobile. That has played well to Samsung's product portfolio, and less well to Intel's. Hence the passing of the crown. And in a weird graphical coincidence, both companies have logos that are in the form of a blue ellipse. #3 SK Hynix with a red and orange butterfly is clearly not going to get there. But #4, Micron, has a blue ellipse in their logo. 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