Semiconductor

Semiconductor Industry Key Financial Data 2023

The following analysis considers the 297 major publicly listed semiconductor companies with a market capitalisation above $1 billion. The numbers in the tables are expressed in millions of dollars except for percentages and ratios.

In 2023 the semiconductor industry generated $972 billion in revenues, a decrease of -0.13% from the $973.6 billion of 2022.

Over the past 10 years, the median growth rate in revenues for the semiconductor industry has been 14.1%.

Overall, the semiconductor industry registered an operating income of $189.2 billion in 2023. Regarding profitability, the 10-year median gross margin is 43.2%, while the 10-year median operating margin is equal to 19.5%.

The total free cash flows to the firm for the semiconductor industry were $82.7 billion in 2023.

Moving on to efficiency ratios, the semiconductor industry’s 10-year median return on invested capital (ROIC) is 22.3%, while the 10-year median sales to invested capital is equal to 0.89.

The 10-year median reinvestment margin for the semiconductor industry – expressed as total reinvestments in net capital expenditures, acquisitions, and R&D divided by total revenues – is 15.3%.

Multiplying the reinvestment margin, which shows how much semiconductor companies have invested over the past years, by the sales to invested capital ratio, showing how efficiently semiconductor companies have invested, we can calculate the expected growth rate in revenues for the semiconductor industry, equal to 14.92%.

Check out this post for a detailed explanation of how to calculate future revenue growth rates.

As regards solvency ratios, the debt-to-enterprise value ratio for the semiconductor industry is 3.8%, while the debt-to-equity ratio is 18.2%.

The interest coverage ratio instead, showing how much the operating income covers interest expenses, is equal to 3.1, which would translate into a credit rating for the semiconductor industry equal to A3/A- based on Moody’s rating standards.

Finally, the unlevered beta of the semiconductor industry – which is the beta depurated by the debt leverage – has been 1.11 for the past 2 years, and 1.18 for the past 5 years.

However, the beta is only one of the required inputs to calculate the appropriate discount rate for company valuation. Check out this page where you can find the equity risk premium for different markets needed to calculate the required cost of equity.