Large semiconductor manufacturers are expected to remain in the lead, as the capital requirements for new entrants are in the billions and no revolutionary innovation in manufacturing processes is expected for the next three years, says Mehdi Hosseini, an Analyst at Susquehanna Financial Group LLLP.
“These companies that make the equipment or provide the processes have been around for 30 years,” Hosseini said. “They have spent billions of dollars in innovation. They are now dominant in the sector, and it prohibits any competition in the manufacturing of the chips because all the initial developmental investment has already been done.”
Hosseini points to Taiwan Semiconductor Manufacturing Company Limited (TSM) as semiconductor manufacturer. He says Taiwan Semi has been recruiting the best minds away from the competition and investing heavily in R&D, putting it at par with semi manufacturers like Intel Corporation (INTC).
“Taiwan Semi, over the past 10 years, has been investing so much and innovating so much in the manufacturing process that they have become a leading high-tech manufacturer,” Hosseini said. “They’ve spent billions of dollars in R&D and purchasing the most leading-edge equipment for their factories.”