TOKYO -- The earnings gap between the world's five largest semiconductor makers and smaller manufacturers will widen in 2014, while research and development costs at the majors will keep climbing, according to U.S. consulting firm AlixPartners.
The prediction suggests that chipmakers will enjoy only limited benefits from the recent pickup in the market caused by the smartphone boom.
The survey, which covered 191 chipmakers and related companies, found that combined sales at Intel of the U.S. and four other global market leaders for the year through the third quarter of 2013 increased 6.2% on the year to $112 billion, accounting for about 30% of total industry sales. In contrast, sales at the remaining 186 companies fell 6.6% to $294 billion.
In terms of earnings before interest, taxes, depreciation and amortization, or EBITDA, the industry as a whole logged a 14.3% decline, but the top five booked a 1.2% increase. The decline at the 186 companies was considerably larger than that for the overall industry, at 26.3%.
But the survey suggests there is no call for celebration among the top five -- Intel, Qualcomm of the U.S., leading semiconductor foundry Taiwan Semiconductor Manufacturing Co., Texas Instruments of the U.S. and SK Hynix of South Korea.
Spending at the five, including R&D and overhead costs, increased 34.8% between 2010 and 2013, while the ratio of R&D costs to sales grew to a five-year high.
"As the work to refine semiconductors becomes more technologically complicated, R&D expenses will keep increasing," said Hiroshi Onodera, director amd executive adviser at AlixPartners.
The consultancy says that if chipmakers want to earn bigger profits, they need to thoroughly review their customer bases and product strategies.
"In medical equipment, telecommunications and other industries with high fixed costs, there have been cases of a 30% improvement in EBITDA," Onodera said.
Under the circumstances, AlixPartners expects the consolidation of semiconductor-related companies will accelerate.