Apple Inc has become the world largest buyer of semiconductors among OEMs (original equipment manufacturers), according to a report out this morning from IHS iSuppli.
Thanks in large part to demand for its iPad tablet and iPhone smartphone, Apple in 2010 bought $17.
5 billion worth of semiconductors, a 79.6% increase from $9.7 billion in 2009. IHS noted that the growth represented the highest rate of increase among the world top 10 OEM semiconductor buyers in the electronics supply chain.
(See table below.) The gain by Apple in the listing was not unexpected. Prior to becoming part of IHS, iSuppli in July 2010 reported that Apple would likely soon become the world top chip purchaser, then predicting Apple spending would increase by 54% in the year.
In 2009, Apple was the third-largest buyer, behind Hewlett-Packard and Samsung Electronics. In 2008, the consumer electronics maker was the sixth-largest buyer. Apple surge to leadership in semiconductor spending in 2010 was driven by the overwhelming success of its wireless products, namely the iPhone and the iPad, said Wenlie Ye, an analyst for IHS, in a statement this morning. These products consume enormous quantities of NAND flash memory, which is also found in the Apple iPod.
Because of this, Apple in 2010 was the world number 1 purchaser of NAND flash. IHS noted that Apple is likely to continue increasing its semiconductor spending during the coming years at an above-average pace in 2011 and beyond. The market research company stated that Apple semiconductor spending is expected to exceed that of Hewlett-Packard by $7.5 billion in 2011, up from $2.4 billion in 2010, for a total of $22.4 bilion spent by the compan this year on semiconductors. The spending illustrates consumer trends toward mobility. IHS reported that Apple, which has heavily bet on mobility while maintaining its Macintosh computer line, spent approximately 61% of its semiconductor budget in 2010 on wireless products such as iPhones and iPads. Meanwhile, 82% of Hewlett-Packard 2010 semiconductor spending was dedicated to computer products like desktops, notebooks, and servers.
According to IHS data, Apple placed its bets wisely. Smartphone shipments in 2010 rose 62%, while tablets shipments were up by more than 900%, fueled by the introduction of Apple iPad. In contrast, global PC shipments grew 14.2% in 2010. IDC last week slashed its PC market growth forecast from 7.1% to a meager 4.2% for 2011, stating tablet completion among the reasons for the cut forecast. IHS further pointed to Apple strength in hardware sales based on its device and media ecosystem.
Through a common ecosystem, Apple leverages each device to sell other devices.
Rising device sales to consumers then leads to increased semiconductor purchasing by Apple, IHS said.
In comparison, the traditional PC business does not put heavy emphasis on the creation of an ecosystem. A buyer that once purchased a Hewlett-Packard PC would just as likely purchase a Dell PC next if the price was better, given that there is little or no value in purchasing another Hewlett-Packard.