World’s biggest chip makers Intel, Samsung Electronics and Taiwan semiconductor Manufacturing are struggling to sustain their level of investment in new chip technology. According to Barron’s Magazine, they are faced with the decade old Moore’s Law that says that chips gets twice the density in every two years. However, this has created an opportunity for equipment manufacturers who supply to chip companies including Applied Materials and ASML Holdings.
Slowdown in PC sales worldwide is the main cause of contraction for chip makers. According to reports PC sales were down eight percent during the third quarter of 2012. This will drag down innovation in chip technology and spending by the three largest chip makers. Intel just announced that it will cut its 2012 capital spending of $12.5 billion by $400 million. This is not good news for innovation as well as reduction of power consumption by newer breed of chips. It will have impact on next generation of smartphones that uses chips made by three main chip makers as well as others including Broadcom, Nvidia and Qualcomm. Samsung in addition to its own smartphone chips also manufacture chips for Apple iPhone for a fee. However, equipment makers are benefiting from lower nanometer chip war between chip makers.