The Silicon Big Five
Forget FAANG. The most important technology platforms for the future are semiconductor platforms. Five companies create the most important silicon platforms that directly influence our future. I call them the Silicon Big Five.
There has been an overwhelming focus on the so-called tech giants aptly named FAANG. With Facebook rebranding to Meta, this will be reorganized, but the acronym is for Facebook/Meta, Apple, Amazon, Netflix, and Google. The common thought was this group consisted of the tech companies driving the tech industry from an economic, platform, and leadership position. Of course, these companies all play a role in the overall tech industry in their unique way. But there are a group of companies that power these companies at a fundamental level and who are more influential to the future.
I call them the Silicon Big Five. This group consists of AMD, Intel, Qualcomm, Nvidia, and Apple. These companies are the driving force behind a much broader future of computing. They will be responsible for pushing all hardware, software, and services forward in the future via their innovations. Throughout my career as an analyst, studying the semiconductor industry has proven to me that once you understand the roadmap of semiconductor companies, it is much easier to see what is possible in the future. Marc Andreessen famously wrote an Op-Ed stating how software is eating the world. Taking a spin-off of his column, I wrote about why semiconductors have to eat the world before any software (or services) can. The reality is, every major software or services breakthrough has come and will come because of innovation or invention from the Silicon Big Five.
Why These 5 Companies
While it is true, there is a wide spectrum of semiconductor companies that play important roles in every technology category, I am choosing these five companies: AMD, Intel, Qualcomm, Nvidia, and Apple as the Silicon Big Five. Because each of them owns proprietary IP related to a critical part of what drives all modern computing devices, each of them brings something proprietary to the CPU or GPU and a host of other companion processors as well. These companies design the central brain and most critical components for running the world’s software. What these companies develop is the piece of the puzzle that does the heavy lifting. The other criteria I’m including is the scale on which these companies ship their silicon platforms to customers. When you look at the sum of their parts being the unique IP related to core computing tasks, the scale they achieve, and the influence they have on the broader hardware, software, and services ecosystem, these five companies are the ones whose silicon most greatly influence the rest of the industry.
It might seem odd to have Apple included in a list of pure semiconductor companies when the silicon they design is not strictly a product in the same sense it is for the rest of the big five. Yet the unique and proprietary IP Apple brings to a central part of their products computing DNA coupled with its significant scale on its devices and platform earns them the right to be included.
The other four companies are obvious inclusions into any semiconductor industry discussion. Intel, Qualcomm, Nvidia, and AMD are the 800 lb gorillas in the semiconductor industry.
- Intel: Still the market share leader in data center/server and desktop/notebook x86 shipments. Despite having a decade of challenges, Intel remains competitive in every market they play. Under Pat Gelsigner’s new leadership, Intel is looking to right the ship with a cleaner product strategy, a more aggressive manufacturing roadmap, and re-invigorating Moore’s Law for growth into new categories.
- Qualcomm: The undisputed leader in wireless technologies. Qualcomm ships ~900m chips to customers annually, and their technology runs on billions of devices. Qualcomm is heavily focused on innovation beyond just their presence in mobile and investing heavily in AR/VR, the intelligent edge (including PCs), entirely new cellular network technology, and autonomous machines.
- Nvidia: Nvidia has transformed beyond their heritage in graphics, though that heritage remains strong, and is responsible for the industry trend of using GPUs for general-purpose computing tasks. Nvidia’s efforts to turn the GPU into a programable platform is an industry game-changer. Nvidia’s solutions run some of the most sophisticated machine learning and computer vision tasks on both client devices and data center solutions. Nvidia has successfully made the GPU one of the most important parts of the future of computing and is continuing to push the boundaries of general-purpose GPU computing.
- AMD: is one of the more remarkable turnaround stories and is continuing to compete with Intel and Nvidia effectively. AMD is in the unique position of challenging Nvidia and Intel from the bottom up with a fully mature CPU and GPU architecture. AMD is continuing to push the envelope in performance and efficiency architectures and process manufacturing using TSMC as a partner for leading-edge CPU and GPU designs.
Something important to keep in mind when thinking about these companies. The trap many make is to think about silicon just as a physical chip and nothing more. These companies do not just design physical semiconductors. All of these companies are actually software companies that create computing platforms. Silicon is just part of their platform story. This is one of the reasons it is so important to recognize the future shaping role these companies play.
The Future Hangs on the Silicon Big Five
In the next few months, I will be broadening this series on the Silicon Big Five and sharing my analysis of each of the company’s efforts in silicon and what it means for the future. I’ll dive into where their strengths and main differentiators lie. I’ll analyze their position in the market and outline broader growth opportunities. And lastly, I’ll look at some of their competitive challenges from others in the Silicon Big Five.
As I outlined in this article on the semiconductor golden era, a focus on architectural improvements, customizations, and total solution, has led to one of the most healthy competitive environments around semiconductors the technology industry has ever seen. This dramatic increase in competition is what will spur the backbone and innovation of all the necessary semiconductor breakthroughs still necessary for us to realize all the exciting futures being envisioned.
Every exciting new technological frontier being discussed today like autonomous cars, robotics, AR/VR, the metaverse, artificial intelligence, health tech, fintech, and more will all be made a reality on the back of the efforts of the Silicon Big Five and the years of innovation still ahead from the semiconductor industry at large. Microprocessors may be largely invisible, but they are the key to the technology industry’s future.