Taiwan’s chip design industry saw one of its strongest growth years ever in 2021, as semiconductor shortages and supply chain troubles forced companies around the world to scramble to secure the chips needed for products ranging from automobiles to PCs to graphics cards and game machines.
Revenue among Taiwan's Top 20 chip designers, or IC (integrated circuit) designers, rose to NT$1.044 trillion (US$35.05 billion) in 2021, from NT$697.2 billion in 2020, a 49.69% increase.
Taiwan is home to the world’s second-biggest IC design industry, behind No.1 USA. A key reason for Taiwan’s strength in the area is the availability of manufacturing partners among the island’s chip foundries, Taiwan Semiconductor Manufacturing Co. (TSMC), United Microelectronics Corp. (UMC) and Vanguard International Semiconductor Corp. (VIS).
TSMC founded the chip foundry business model in Taiwan, and the idea of separating IC design and manufacturing caught on quickly.
Several of the strongest IC designers in Taiwan were spun out of UMC, which housed both IC design and manufacturing teams before it re-focused its business on the foundry model and spun out several design firms.
Taiwan’s top IC design firm, MediaTek, Inc., is one of the former UMC-spinoffs. The company designed ICs for optical devices such as CD and DVD players decades ago, before moving into designing ICs for mobile phones and then smartphones. Today the firm is well known as the toughest global rival to US-based Qualcomm Inc.
MediaTek’s 2021 revenue rose 53.2% year-over-year to NT$493.4 billion, which is over 3.6-times more revenue than its nearest Taiwan competitor, and up from NT$322.15 billion in 2020.
Display Driver IC (DDIC) designer Novatek Microelectronics Corp., also a former member of the UMC family, came in second, as revenue rose 69.3% to NT$135.37 billion in 2021. The company benefitted from shortages of DDICs that lasted throughout the year.
Realtek Semiconductor Corp., which designs wireless networking chips, including WiFi chips, came in third at NT$105.5 billion, the final IC designer with more than NT$100 billion in 2021 revenue.
Phison Electronics Crop., the NAND Flash controller designer, was fourth with NT$62.56 billion in revenue, and Raydium Semiconductor Corp. took fifth in revenue at NT$24.83 billion.
The Top 20 are all listed in the table above.
It’s important to note that the list is limited to Taiwan Stock Exchange-listed companies. Two of Taiwan’s top IC designers are listed on the U.S.’s Nasdaq Stock Market. Himax Technologies Inc. (HIMX), the DDIC designer, would have ranked No. 5 on the Top 20 list, as its 2021 revenue was US$1.55 billion, or NT$46.10 billion. Silicon Motion Technology Corp. (SIMO), the SSD controller designer, would have come in just behind Himax, as its 2021 revenue totaled US$922.1 million, or NT$27.47 billion.
There are also a few overseas-domiciled Taiwan companies on the Top 20 list because their stock is listed in Taiwan, including Parade Technologies Ltd., which counts major operations in San Jose, USA, and is a Cayman Islands company; and Silergy Corp., of Hangzhou, China.
Due to the relationship between Taiwan and China, in which China claims sovereignty over but does not govern Taiwan, it is sometimes necessary for companies to creatively choose the location of their headquarters and stock exchange. For example, a Taiwan chip design firm that depends on China’s market might open their headquarters there for market access and potential government benefits, but if key employees are in Taiwan, list on a Taiwan exchange in order to offer them locally-listed shares in the company.
Profitability among Taiwan’s IC designers in 2021 rocketed higher alongside revenues, as shortages gave companies more pricing power. Total net profit among the Top 20 rose 143.47% to NT$236.72 billion in 2021, from NT$97.23 billion a year earlier.
Fitipower topped the list with a 773.1% increase in net profit to NT$6.39 billion; followed by FocalTech Systems Co. Ltd. with a 519.9% gain to NT$6.10 billion; and Faraday Technology Corp., another UMC-spinoff, with a 403.9% rise to NT$1.29 billion.
There are a number of other noteworthy statistics from Taiwan’s 2021 IC design data, including the biggest percent revenue gain, and top gross margin.
The companies with the strongest year-on-year revenue growth among the Top 20 were: Fitipower Integrated Technology Inc., with a 110.1% increase; AP Memory Technology Co., with an 86.4% gain; and Raydium Semiconductor Corp. with a 72.2% increase.
Six companies in the Top 20 boasted gross profit margins (GM) over 50%. The top three were Pixart Imaging Inc. at 57.07%; Sitronix Technology Corp. at 55.5%; and Holtek Semiconductor Inc. at 53.54%.
The other three were Silergy at 53.27%; Sunplus Technology Co. Ltd. at 52.28%; and Faraday at 50.59%.
Overall, it was a strong year for Taiwan’s IC design industry and will be tough to beat in terms of growth, but most companies have forecast even higher revenue in 2022.
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