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Abu Dhabi, UAETuesday 18 September 2018

Samsung tops Intel as chip maker with $69bn sales

Switch underlines how Samsung has become a pervasive supplier of key components in smartphones and other devices

Samsung has knocked Intel off the top slot in terms of sales. Ahn Young-joon/AP
Samsung has knocked Intel off the top slot in terms of sales. Ahn Young-joon/AP

Intel recorded revenue in 2017, but it was not enough.

Samsung Electronics knocked Intel off its perch as the world’s biggest chip maker by revenue, a distinction the US company has held since 1992. On Wednesday, Samsung reported 2017 chip sales of $69 billion, blowing past Intel’s $63bn from last year.

The switch underlines how Samsung has transformed itself from a maker of televisions into a pervasive supplier of key components in smartphones and other modern computing devices. It is also a testament to the growth of memory chips, Samsung’s main market.

Net income rose to a record 12 trillion won (Dh41.13bn) in the three months ended December, the Suwon, South Korea-based company said. That compares with the 12.1tn won average of estimates compiled by Bloomberg.

Intel, whose processors are the heart of about 90 per cent of the world’s computers, did not have a bad year. Sales rose 6 per cent, but success in computers is no longer enough. Memory chips, a market Intel only recently returned to, are now crucial parts of smartphones, which easily outsell PCs these days. Memory chips are also finding their way into a range of devices such as cars.

One of the ironies of Samsung’s success in memory is that it is a business Intel created in the 1960s. The US company quit the market when competition from Japanese companies became too great in the early 1990s, then recently re-entered. One of Intel’s biggest growth areas last year was memory chips, but it has a long way to go to catch up with Samsung.

Samsung is splitting its stock as a “step to enhance shareholder value”, after reporting record earnings on robust demand for memory chips and sales of high-end displays for the iPhone X.

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The company’s shares rose as much 8.7 per cent after the board approved a 50 to 1 split on Wednesday, Samsung said. Its shares rose 5.2 per cent to 2,620,000 won at 9:28am in Seoul. The stock rose 41 per cent in 2017.

The South Korean company made its start in memory chips by licensing technology from Intel’s Japanese rivals. Samsung is moving in on Intel’s turf now, making higher-priced components. Its factories now churn out processors that run mobile phones and it is the contract manufacturer for Qualcomm, which is taking a run at Intel in PC and server processors.

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