ASC 100: TSMC, Samsung lead in market value; semiconductor, EV sectors gaining traction

Benefiting from the US-China tech war and sharp chip shortages following the pandemic outbreak, and with automotive clients competing for foundry capacity support, the entire semiconductor industry is poised to enjoy robust order momentum through 2022, allowing semiconductor stocks to gain traction in the market. TSMC and Samsung Electronics, now the world's only two companies able to commercialize sub-7 nm foundry nodes, have been in a two-horse race for grabbing the crown in the Digitimes' Asia Supply Chain 100 (ASC 100) research, ranking first and second, respectively, by market capitalization in 2020. ASC 100 is a study based on the companies' revenues, profit and market cap that will be renewed annually.

TSMC overtook Samsung in market capitalization by a margin of US$40.335 billion in 2020, successfully winning the crown. Taiwan's five major electronics ODMs all saw lower market value rankings than their revenue rankings, but semiconductor companies like TSMC and MediaTek, and electronics components supplier Delta Electronics saw just the opposite. This has indicated that the market evaluation of technology supply chain players is more associated with their future development potential and market competitiveness.

The market values of automotive manufacturers also reflect the market preference for shares of enterprises in the electric vehicle (EV) supply chain. A total of 24 automotive makers have entered the ASC 100 list. Among the 15 ranked among the top 50, as many as 14 makers saw lower market cap rankings than thei respective revenue rankings, with China's BYD Auto as the only exception (ranked 37th in revenue and 9th in market cap). Meanwhile, Beijing Automotive's revenue and market value rankings differed the most, at 35th vs 91st.

By contrast, among the nine automotive manufacturers ranked 51-100, only Yamada Motor ranked lower in market value (65th) than in revenue (58th), and the remaining eight all had better rankings in market value than in revenue. India's Maruti Suzuki posted the largest difference in both rankings, 74th in revenue and 27th in market value.

Among the top 100, 72 companies logged higher market capitalization in 2020 than in 2019. Of the 11 companies with market value growth rates of over 100%, 10 are Chinese manufacturers, mostly engaged in auto/motorcycle manufacturing (including Great Wall Motor, BYD Auto and Changan Auto) and ICT terminal devices and equipment production (including Xiaomi, BYD Electronics and Goertek). Meanwhile, there are 12 manufacturers with market value falling by over 20%, including eight from Japan, also mostly in automotive manufacturing (Isuzu, Mazda and Mitubishi) and ICT terminal devices/equipment production (Canon, Ricoh and Konica Minolta).

Of Taiwan's companies on the list, electronics components makers Innolux and Delta Electronics witnessed their market values grow the fastest, reaching over 80% in on-year growth, yet still far behind a corresponding increase of up to 182.7% registered by Samsung SDI.

However, market capitalization is affected more by the performance and preference of capital markets in individual countries, and therefore the growth of market value may not necessarily serve as a criteria for assessing the medium- and long-term competitiveness of a company. Among Taiwan's semiconductor firms, for instance, MediaTek saw its market value grow 79% on year in 2020, higher than TSMC's 68.8%, but the corresponding growth rate at China's battery solar cell maker LONGi hit a high of 290.1%.

Some trends are worth noting. For example, many ICT terminal devices and equipment makers in Taiwan and Japan, with the exception of Quanta Computer, Asustek Computer, Compal Electronics, Inventec and Wistron posting slight increases or flat performance in market capitalization thanks to robust business opportunities arising from remote work and teaching applications amid the pandemic, fell in the market value rankings. Most notably, Foxconn (Hon Hai) dropped to 18th in 2020 from 11th in 2019, and its affiliate Foxconn Industrial Internet (FII) fell to 22nd from 8th, while Japan's Canon slipped to 34th from 16th, and Hitachi declined to 24th from 13th. In contrast, China's Xiaomi advanced to 5th from 19th , while Goertek and Luxshare Precision also leaped by 10 and nine notches, respectively. Meanwhile, China's Wingtech Technology, through acquiring Ofilm, just squeezed into the bottom of the top 100 list by revenue, but its market value ranked much higher at 45th. All this may be interpreted as a reshuffle in the supply chain.

Source: Stock markets, compiled by Digitimes, May 2021