Wednesday, June 4, 2025 2:04 AM EDT

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An Introduction

The semiconductor industry plays a crucial role in driving technological advancements and innovations and is also a key enabler for the growth of other industries, such as automotive and healthcare, therefore, understanding the semiconductor value chain and the companies involved in it is crucial and that is what this article does. Read on.

What Is A Semiconductor?

A semiconductor (aka computer chip or wafer) is a material that has an electrical conductivity value falling between that of a conductor, such as copper, and an insulator, such as glass. In many cases their conducting properties are altered by introducing impurities (doping) into the crystal structure and when two differently doped regions exist in the same crystal, a semiconductor junction is created. Connecting the two materials causes creation of a depletion region near the boundary, as the free electrons fill the available holes, which, in turn, allows electric current to pass through the junction only in one direction. and is the basis of diodes, transistors, and most modern electronics. Silicon is a critical element for fabricating most  electronic circuits and is the most common semiconductor. After silicon, gallium arsenide is the second-most common semiconductor and is used in laser diodes, solar cells, microwave-frequency integrated circuits, and others.

What Is the Semiconductor Value Chain?

The semiconductor value chain refers to the 4 stages involved in the production and distribution of semiconductor devices such as microprocessors, memory chips, and sensors which are used in a wide range of electronic devices, including smartphones, computers, and automobiles. The semiconductor value chain is a complex and dynamic process that involves multiple companies, each with their own specialized roles. (Source)

What Are the 4 Semiconductor Value Chain Stages?

 The AI hardware sector consists of 8 distinct sub-segments (read How Did The 8 AI Hardware Portfolios Perform In May? Here’s A Summary) for an overview of those 8 sub-segments), each with its own unique dynamics and growth trajectories. The first 4 sub-segments are referred to as the semiconductor value chain and consist of the 4 stages in the creation of semiconductor wafers (chips), namely:

1. software design (read Custom Design Software (EDA) Stocks Relatively Unchanged In May; Down Slightly YTD). Focus: involved exclusively (i.e. pure-play) in the custom design of complex semiconductor chips using sophisticated electronic design automation (EDA) software.
2. production equipment/material supplies (read Model Pure-Play Semiconductor Supplier Portfolio: UP 7.6% In May; UP 8.6% YTD); Focus: provide essential equipment for manufacturing chips such as lithography machines, and production materials such as chemicals and gases.
3. production – called foundries in industry jargon (The Pure-Play Semiconductor Foundries Model Portfolio: UP 13% in May; DOWN 7% YTD); Focus: concentrate all their efforts in the manufacturing (fabrication (or fab) in industry jargon) of chips based on the designs provided by other semiconductor companies.
4. preparation for shipping (The Pure-Play Outsourced Semiconductor Assembly and Test Model Portfolio: DOWN 7.7% in May; DOWN 23.4% YTD); Focus: assemble chips into finished semiconductor components, tests for defects and do the very specialized packaging of the chips for shipping.

There are only 4 pure-play semiconductor foundries trading on U.S. stock exchanges and they are outlined below as to their stock performances in May, in descending order, and YTD, along with their market share based on revenue, and any recent news, analysis and/or commentary on their current situation and future prospects, as follows:

The MunAiMarkets Pure-Play Semiconductor Foundries Portfolio

1. Taiwan Semiconductor Manufacturing Company (TSM): UP 16.0% in May; DOWN 2.1% YTD
   

   • TSM was the world’s first pure-play and is the largest foundry company. Its primary fab is in Taiwan with additional wholly owned subsidiary fabs in Japan (2), USA (1); China (1); Germany (1 – a JV fab with ESMC to begin production in 2027; U.S. (3 in Arizona with production to begin in 2025, 2028, and 2029/2030; and Japan (2 – by majority owned JASM with production to begin in 2024 and 2027)
   • Market Capitalization: $834B.
   • Market Share: 62%
   • Latest News, Analysis and/or Commentary:
     

2. Tower Semiconductor (TSEM): UP 10.2% in May; DOWN 23.4% YTD

   • TSEM is domiciled in Israel with a design center there and operates 7 manufacturing facilities: Israel (2); USA (2); Japan (2) and Italy (1 shared with ST Microelectronics).
   • Market Capitalization: $4.7B
   • Market Share: 1%
   • Latest News, Analysis and/or Commentary:
     

3. United Microelectronics Corporation (UMC): UP 8.1% in May; UP 17.3% YTD

   • UMC is headquartered in Taiwan, with fabs in Taiwan (8); China (2); Singapore (1) and Japan (1).
   • Market Capitalization: $19.2B
   • Market Share: 6%
   • Latest News, Analysis and/or Commentary:
     

4. GlobalFoundries (GFS): UP 2.1% in May; DOWN 16.6% YTD

   • GFS is headquartered in New York with fabs in Singapore (2); the U.S. (2); and Germany (1). GFS has already received over $1.5 billion via the CHIPS and Science Act.
   • Market Capitalization: $20.6B
   • Market Share: 6%
   • Latest News, Analysis and/or Commentary:
     

In Summary:

The above 4 pure-play semiconductor foundry stocks account for a 75% share of the total market. They were UP 12.9% in May but remain DOWN 7.4% YTD.

Not included in the above analysis are Samsung Foundry; SMIC, HuaHong; PSMC; VIS; and DB Hitek with at total of 25% in total market share as they are either not pure-play foundries or are not traded on a U.S. or Canadian stock exchange.

More By This Author:

Model Pure-Play Semiconductor Supplier Portfolio: UP 7.6% In May; UP 8.6% YTD

Custom Design Software (EDA) Stocks Relatively Unchanged In May; Down Slightly YTD

How Did The 8 AI Hardware Portfolios Perform In May? Here’s A Summary

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