Apple tops semiconductor buyer list in 2011

January 24, 2012 — Leading electronic equipment manufacturers accounted for $105.6 billion of semiconductors on a design total available market (TAM) basis in 2011, 35% of semiconductor vendors’ worldwide chip revenue, according to Gartner Inc. This represented a year-over-year increase of $1.8 billion, or 1.8% from 2010.

"The major growth drivers in 2011 were smartphones, media tablets and solid-state drives (SSDs)," said Masatsune Yamaji, principal research analyst at Gartner. "Those companies that gained share in the smartphone market, such as Apple, Samsung Electronics and HTC, increased their semiconductor demand, while those who lost market share in this segment, such as Nokia and LG Electronics, decreased their semiconductor demand. Media tablets were also a growth driver for the semiconductor market throughout 2011."

"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," Mr. Yamaji said. "Vendors need to be constantly looking for new market entrants who will, in turn, be tomorrow’s market leaders."

Within the top 10 rankings, three companies were from the Americas, three from Asia/Pacific, three from Japan and one from Europe, the Middle East and Africa (EMEA). Apple led the market in 2011 (see Table), achieving significant growth, as it has done for the past five years. As a result, Apple became the biggest customer of semiconductor chip vendors in 2011, climbing two places in the ranking, from third in 2010.

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Apple gained a much greater share of the smartphone market, and its media tablet business was also highly successful in 2011. While DRAM prices fell drastically in 2011, and many PC vendors decreased their total semiconductor demand accordingly, the success of the MacBook Air enabled Apple to increase semiconductor chip demand even in its PC business.

Table. Top 10 Semiconductor Design TAM by Company, Worldwide 2011, Preliminary (Millions of Dollars).

Rank

2010

Rank

2011

Company

2010

2011

Growth (%)

Share (%)

3

1

Apple

12,819

17,257

34.6

5.7

2

2

Samsung Electronics

15,272

16,681

9.2

5.5

1

3

HP

17,585

16,618

-5.5

5.5

5

4

Dell

10,497

9,792

-6.7

3.2

4

5

Nokia*

11,318

9,042

-20.1

3.0

6

6

Sony*

9,020

8,210

-9.0

2.7

7

7

Toshiba

7,768 

7,589

-2.3

2.5

10

8

Lenovo

6,091

7,537

23.7

2.5

8

9

LG Electronics

6,738 

6,645

-1.4

2.2

9

10

Panasonic

6,704

6,267

-6.5

2.1

 

 

Others

195,552

196,413

0.4

65.0

 

 

Total

299,364

302,051

0.9

100.0

*2 joint ventures are included as stand-alone firms, as they are independent buying centers: Sony Ericsson and Nokia Siemens Networks.

Design TAM represents the total silicon content in all products designed by a certain 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. Design TAM is a useful index for semiconductor vendors when they are considering how to allocate their sales or field application engineer resources by customer or region. Purchasing TAM is a useful index for semiconductor vendors when they are considering how to establish an efficient distribution network by customer or region.

As more brand-name companies are increasing their production outsourcing to original design manufacturers (ODMs) and electronics manufacturing services (EMS) providers, semiconductor procurement by ODMs and EMS providers has increased year over year, Yamaji said. Currently, three of the top 10 purchasing TAM companies are contract manufacturers.

"Semiconductor chip vendors must pay attention not just to the design TAM and purchasing TAM by company, but also by region," said Yamaji. "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."

Additional information is available in the report "Market Insight: Apple Led OEM, ODM and EMS Semiconductor Demand in 2011" at http://www.gartner.com/resId=1517414.

Gartner Inc. (NYSE:IT) is a leading information technology research and advisory company. For more information, visit www.gartner.com.

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