> 2% profit would be a banner year for Samsung. 85% reduction from that would not be that notable.
Which history? The last 20 years have been extraordinarily lucrative in semiconductors. All eras aren't the same and today's semiconductor business - which is heavily consolidated and gigantic - is not similar to the distant past.
A normal operating profit margin for the semiconductor business is 15-30%. No healthy semiconductor business today is routinely operating at sub 5% operating income margins.
2% profit isn't a banner year, that's a bad year for any relevant semiconductor company of the last quarter century.
Intel, Taiwan Semi, Nvidia, Qualcomm, Texas Instruments, ASML, Analog Devices, LAM, KLA, Broadcom, NXP, ON Semi
Take a look at their operating profit margins. Nobody in that sector with a normal to healthy business is operating anywhere close to a 2% profit. Nearly all the majors more routinely operate with abnormally fat profit margins compared to other types of business.
ASML has a 30%+ operating income margin.
Nvidia has historically been around 15-25% operating income margin, and are now approaching 50%.
The average operating income margin for Intel over the past 25 years is closer to 20-25%.
Taiwan Semi is at 40-45% operating income margin.
Qualcomm is at 20%.
Texas Instruments is over 40%.
Analog Devices is at 30%.
Applied Materials is at 30%. KLA is at 35-40%. LAM is at 25-30%.
Broadcom is at 40%.
NXP is at 20-30%.
ON is at 20-30%.
These are normal margins today for semis. And you could cut them in half and they're still drastically above the low single digit area.
The semiconductor industry is split into two key components:
- fabs
- engineering design centers
Broadcom is hardly a semi company anymore after all its high-margin software acquisitions (see: VMWare, Computer Associates/"CA Technologies", etc).
Qualcomm doesn't operate any fabs that ship to customers.
Nvidia doesn't make anything.
Many of the others in your list have found profitable niches at scale that are huge value-adds to their customers. The semi space is known for consolidation and many of these players are the last survivor in their field, which lends itself to profitable operations that don't have competitors due to the costs of entry.
Which history? The last 20 years have been extraordinarily lucrative in semiconductors. All eras aren't the same and today's semiconductor business - which is heavily consolidated and gigantic - is not similar to the distant past.
A normal operating profit margin for the semiconductor business is 15-30%. No healthy semiconductor business today is routinely operating at sub 5% operating income margins.
2% profit isn't a banner year, that's a bad year for any relevant semiconductor company of the last quarter century.
Intel, Taiwan Semi, Nvidia, Qualcomm, Texas Instruments, ASML, Analog Devices, LAM, KLA, Broadcom, NXP, ON Semi
Take a look at their operating profit margins. Nobody in that sector with a normal to healthy business is operating anywhere close to a 2% profit. Nearly all the majors more routinely operate with abnormally fat profit margins compared to other types of business.
ASML has a 30%+ operating income margin.
Nvidia has historically been around 15-25% operating income margin, and are now approaching 50%.
The average operating income margin for Intel over the past 25 years is closer to 20-25%.
Taiwan Semi is at 40-45% operating income margin.
Qualcomm is at 20%.
Texas Instruments is over 40%.
Analog Devices is at 30%.
Applied Materials is at 30%. KLA is at 35-40%. LAM is at 25-30%.
Broadcom is at 40%.
NXP is at 20-30%.
ON is at 20-30%.
These are normal margins today for semis. And you could cut them in half and they're still drastically above the low single digit area.