The GICS semiconductor and semiconductor equipment industry (453010) has two subindustries—the semiconductor equipment subindustry (45301010) and the semiconductors subindustry (45301020). Members of the semiconductor equipment subindustry include equipment suppliers such as Lam Research Corporation and ASML Holdings NV; the semiconductors subindustry includes integrated circuit manufacturers Intel Corporation and Taiwan Semiconductor Manufacturing Company Ltd.

Lam Research is a leading supplier of wafer fabrication equipment and services to the world’s semiconductor industry. Lam also offers wafer-cleaning equipment that is used after many of the individual steps required to manufacture a finished wafer. Often, the technical advances that Lam introduces in its wafer-etching and wafer-cleaning products are also available as upgrades to its installed base. This benefit provides customers with a cost-effective way to extend the performance and capabilities of their existing wafer fabrication lines.

ASML describes itself as the world’s leading provider of lithography systems

(etching and printing on wafers) for the semiconductor industry. ASML manufactures complex machines that are critical to the production of integrated circuits or microchips.

ASML designs, develops, integrates, markets, and services these advanced systems, which help chip makers reduce the size and increase the functionality of microchips and consumer electronic equipment. The machines are costly and thus represent a substantial capital investment for a purchaser.

Based on revenue, Intel is the world’s largest semiconductor chip maker and has the dominant share of microprocessors for the personal computer market. Intel has made significant investments in research and development (R&D) to introduce and produce new chips for new applications. Established in 1987, Taiwan Semiconductor Manufacturing (TSM) is the world’s largest dedicated semiconductor foundry (a semiconductor fabrication plant that executes the designs of other companies). TSM describes itself as offering cutting-edge process technologies, pioneering design services, manufacturing efficiency, and product quality. The company’s revenues represent about 50 percent of the dedicated foundry segment in the semiconductor industry.

The questions that follow take the perspective of early 2009, when many economies around the world were in a recession. Based only on the information given, answer the following questions:

1. If the weak economy of early 2009 were to recover within the next 12–18 months, which of the two subindustries of the semiconductor and semiconductor equipment industry would most likely be the first to experience a positive improvement in business?

2. Explain whether Intel and TSM should be considered members of the same peer group.

3. Explain whether Lam Research and ASML should be considered members of the same peer group.