Mon, 10/6/2014 - 3:22PM — VALUATION

The semiconductor industry is unique in that its scope stretches across numerous market applications (e.g., automotive, computing, consumer electronics, industrial, wireless communications). Much of the growth in semiconductors can be attributed to the increasing demand in the device technology sectors (e.g., computers, tablets, smartphones). Due to this relationship, the semiconductor industry has become much more cyclical.1   As a result, semiconductor manufacturers have become increasingly wary of R&D spending. The cumulative process of semiconductor innovation makes it very difficult for R&D managers to assess projects based on the patentability of the underlying research.2  Instead, lead time, secrecy, and manufacturing or design capabilities are relied upon to assess the probability of recouping R&D investments.3  Despite all this, patents within the semiconductor industry remain popular as they offer a strategic edge to players in the space.

Because of this potential commercial value, patents have continued to be filed at a high rate. The quality of these patents varies, as the quality of claims can be diluted in such a crowded technology space. Since the start of 2014, thousands of patents have been issued within the United States Patent Classification code 438 - Semiconductor Device Manufacturing.4  A summary of the most active filers of Semiconductor patents in the US, and their associated Average Ocean Tomo Rating, can be found in the table below.

Table 1: Top USPC 438 Companies by Patents Issued - Year to Date 2014

Company Patents Issued Average OTR5
International Business Machines Corp. 487 101.7
Samsung Electronics Co., Ltd. 413 112.8
Taiwan Semiconductor Manufacturing Co., Ltd. 348 123.1
Micron Technology, Inc. 203 133.6
Toshiba Corp. 199 106.8
Semiconductor Energy Laboratory Co., Ltd. 169 141.5
Global Found Inc. 162 110.0
Infineon Technologies AG 101 126.3
Singapore Technologies Semiconductors, Ltd. 95 118.4
Applied Materials, Inc. 93 115.6
Panasonic Corp. 91 105.4
Fujitsu, Ltd. 91 109.4
Tokyo Electron, Ltd. 84 105.1
Texas Instruments, Inc. 82 124.8
United Microelectronics Corp. 82 107.9
SK Hynix, Inc. 79 105.5
Renesas Electronics Corp. 77 118.0
Sony Corp. 75 108.3
Freescale Semiconductor, Ltd. 73 112.6
STMicroelectronics 55 109.1
Intermolecular, Inc. 55 118.7
Sumitomo Electric Industries, Ltd. 52 105.2
Intel Corp. 48 126.2
Canon, Inc. 47 120.5
Sharp Corp. 46 112.2
Hitachi, Ltd. 46 104.2
Lam Research Corp. 46 126.9
LG Display Co., Ltd. 43 112.3
Semiconductor Manufacturing International Corp. 40 96.6


As expected, some of the major industry competitors in the space account for a substantial portion of the patenting activity so far in 2014, with the top 30 companies representing over half of the issued patents. However, it should be noted that companies pursue unique filing strategies, and comparing the number of filings does not necessarily translate into the relative value of patent portfolios. This is because developing a patent thicket does not offset a lack of quality claims, particularly given the expansive nature of semiconductor technology. Because technology in the space is so diverse, it is difficult to compare the quality of patents in an objective manner. As such, the Ocean Tomo Ratings© system can be used to compare the relative strength of patents and patent portfolios. A summary of the top semiconductor companies by average OTR of patents issued in 2014 can be found below.

Table 2: Top USPC 438 Companies by Average OTR - Year to Date 2014

Company Patents Issued Average OTR6
Magna International, Inc. 6 186.2
Precursor Energetics, Inc. 4 155.1
Amkor Technology, Inc. 6 155.0
Intersil Corp. 5 149.5
United Test and Assembly Center, Ltd. 6 148.4
SBC Knowledge Ventures, LP 4 146.2
SanDisk Corp. 23 144.6
Semiconductor Energy Laboratory Co., Ltd. 169 141.5
Skyworks Solutions, Inc. 6 138.2
Bridgelux, Inc. 4 137.1
Semileds Optoelectronics Co., Ltd. 8 135.7
Thermo Fisher Scientific, Inc. 8 134.6
Micron Technology, Inc. 203 133.6
Total Energies Nouvelles Activités USA, SAS 12 133.4
SunPower Corp. 12 133.4
BlackBerry, Ltd. 5 133.3
Dover Corp. 15 132.0
International Rectifier Corp. 14 131.2
AT&T, Inc. 4 130.8
Cypress Semiconductor Corp. 9 130.2
University of Illinois System 4 129.9
Marvell Technology Group, Ltd. 8 129.3
University of California System, The 27 128.6
Google, Inc. 5 128.1
Unimicron Technology Corp. 5 127.4
QUALCOMM Inc. 34 127.2
Lam Research Corp. 46 126.9
Infineon Technologies 101 126.3
Intel Corp. 48 126.2


The majority of the top rated patents focus on the manufacturing and implementation of semiconductor technology, indicating that innovation in these areas is integral for companies to remain competitive. The industry has experienced, and is continuing to experience significant growth, driven primarily by the ability to remain on the cutting edge in the consumer electronics segment. The industry generated $28.1 billion in sales for the month of July 2014, which is the highest-ever monthly sales figure, and growth is expected to continue through the end of 2014.7  Regionally, year-to-year sales increased in the Americas (8.1 percent) , Asia Pacific (11.2 percent), Europe (14.9 percent) , and Japan (2 percent). Sales were up compared to the previous month in the Americas (3 percent), Asia Pacific (2.3 percent), Europe (2.9 percent), and Japan (2 percent).8  As sales continue to grow, so too will the emphasis on maintaining a robust patent portfolio to meet demands in an ever-changing industry.

A special thanks to Tyler Remick and Dan McEldowney for contributing to this blog post.

Photo by Jorge Franganillo / CC BY-SA 4.0

1. Worldwide Semiconductors 2014-2018 Forecast, page 1
2. Patent Litigation in the US Semiconductor Industry, page 181;
3. Patent Litigation in the US Semiconductor Industry, page 181;
5. Ocean Tomo Ratings® System, accessed 5 September 2014
6. Ocean Tomo Ratings® System, accessed 5 September 2014, minimum four issued patents



Ocean Tomo’s Valuation professionals are recognized as experts in IP and intangible asset valuation, having performed hundreds of strategic valuations for Fortune 500 companies, and small-to-mid-sized businesses, across a variety of industry segments. Managing Director Greg Campanella leads the Management Services Group and the Valuation Practice for Ocean Tomo.

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