Apple top semiconductor buyer in 2011

Leading with 5.7 percent, Cupertino was top customer of chip manufacturers amid strong growth in smartphone and media tablet markets, reveal new figures from Gartner.
Written by Ellyne Phneah, Contributor

Apple was the top semiconductor buyer last year, as leading electronics equipment manufacturers remained the center of the worldwide semiconductor industry, according to a new Gartner report released Wednesday.

The research firm said Apple led the seminconductor market in 2011, growing their share by 34.6 percent to claim 5.7 percent of the market. Cupertino saw significant growth last year, as it did in the past five years, which drove the company to become the biggest customer of semiconductor vendors, climbing two spots from third place in 2010.

Apple gained a much greater share of the smartphone market in 2011 and its media tablet also proved successful, Gartner said. While DRAM prices fell drastically in 2011 and PC vendors reduced their overall semiconductor demand, the success of the MacBook Air enabled Apple to boost semiconductor chip demand, the research firm added.

Samsung and Hewlett-Packard tied at second and third place with 5.5 percent market share each, followed by Dell and Nokia at 3.2 percent and 3 percent, respectively. Sony, Toshiba, Lenovo, LG Electronics and Panasonic assumed the remaining top 10 positions in terms of semiconductor design of Total Available Market (TAM).

Design TAM refers to the total silicon content in all products designed by a specific electronic equipment manufacturer or in a certain region, while purchasing TAM represents the total silicon content purchased directly by a certain electronic equipment manufacturer or in a certain region.  

As more brand-name companies increase their production outsourcing to original design manufacturer (ODMs) and electronics manufacturing services (EMS) providers, semiconductor procurement by ODMs and EMS providers also increased year-on-year, Masatsune Yamaji, principal research analyst at Gartner, said in the report.

"Semiconductor chip vendors must pay attention not just to the design TAM and purchasing TAM by company, but also by region. This is the key to avoiding inappropriate sales resource allocation. They must keep an eye on design-win opportunities in the U.S., while also establishing a strong distribution network in China," Yamaji noted.

According to Gartner, leading electronic equipment manufacturers contributed US$105.6 billion of semiconductor revenue on a design TAM basis, accounting for 35 percent of worldwide chip revenue. This represented a year-on-year increase of US$1.8 billion, or 1.8 percent from 2010.

Yamaji added that major growth drivers last year were smartphones, media tablets and solid-state drives (SSDs), and companies such as Apple, Samsung and HTC  which gained share in the smartphone and media tablet segments increased their semiconductor demand. On the other hand, those which lost market share in the segment such as Nokia and LG Electronics reduced their seiconductor demand, the Gartner analyst said.

"Given the rapidly changing competitive structure of the IT and electronics industry, no semiconductor device vendor can afford just to monitor the requirements of the current market leaders," Yamaji noted. "Vendors need to be constantly looking for new market entrants who will, in turn, be tomorrow's market leaders."

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