"WE ARE GOING to look back and see 2012 as a breakpoint," declares Bill McClean, head of analyst firm IC Insights. "The IC industry is changing structurally." A bold assertion, but the evidence for this change, according to McClean, lies in the amount of money the largest chipmakers are spending on expanding production capacity versus their smaller competitors (see table, p82). For 15 years, Intel has sat atop the IC manufacturing leaderboard due to its dominance of the PC industry. In the early 1980s, when IBM decided to use Intel's x86 architecture, the company's fortunes turned around dramatically. Up to that point, Intel had specialised in making memories and was the prime supplier during the 1970s, but was facing stiff competition from rising Japanese companies such as Hitachi and NEC. As Intel struggled against companies that were undercutting it by at least 10 per cent on price in what had been up to then its most lucrative market, IBM decided in 1983 to secure its supply of processors by investing $250m in the company. By 1985, NEC was the top supplier of ICs worldwide; the three other Japanese memory makers - Hitachi, Toshiba, Fujitsu - were fourth, fifth and sixth.
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