Apple Bounds To Top Semiconductor Buyer - InformationWeek
Infrastructure // PC & Servers
10:49 AM

Apple Bounds To Top Semiconductor Buyer

The company spent nearly 80% more on chips last year to meet demand for its consumer products, and now consumes 30% of all NAND flash memory in the world, reports IHS iSuppli.

Apple iPad 2 3G Teardown
(click image for larger view)
Slideshow: Apple iPad 2 3G Teardown
Popularity of iPhone and iPad devices has driven Apple to become the largest buyer of semiconductors among all original equipment manufacturers (OEMs) for the first time, according to a report by IHS iSuppli.

In 2010, Apple bought $17.5 billion worth of semiconductors, a staggering 79.6% increase from $9.7 billion in 2009. This was unsurprisingly the highest rate of increase among the world's top 10 OEM semiconductor buyers, allowing Apple to rise up two positions to take the No. 1 rank in 2010.

Worldwide semiconductor revenue reached $299.4 billion in 2010, an increase of $70.7 billion, or 30.9% from 2009, according to a report by Gartner. The rise in revenue was due to a sudden increase in demand as the semiconductor industry was forced to ramp up production.

Apple's semiconductor spending is largely in NAND flash, which is used in iPods, iPhones, and iPads, as well as other tablets and phones, for computing and storage needs. Apple was also the world's top purchaser of NAND flash in 2010.

"Apple spent $4.7 billion last year on NAND flash and will spend an estimated $6.4 billion on NAND flash this year," said Wenlie Ye, an IHS iSuppli analyst, in an interview. "With $6.4 billion NAND flash purchased out of about 187 companies in the world that purchase it, Apple accounts for about 30 to 35% of all NAND flash memory consumption."

HP was the second leading buyer of semiconductors in the world at just under $15 billion, while Samsung was third at around $14 billion. They were followed by Dell, Nokia, Sony, Cisco, Panasonic, LG Electronics, and Toshiba.

Apple's strength derives from its product ecosystem that synergistically connects its different devices through its iTunes and iOS. Because of this, users of the Apple ecosystem find increasing value from each additional Apple device they buy and have little interest in leaving the Apple realm, Ye said. This gives the company a distinct advantage over Apple rivals HP and Dell.

"Apple's surge to the top as the world's largest OEM semiconductor buyer further confirms the connected devices evolution, where formerly independent hardware devices, such as TVs, PCs, and handsets, are now needed to be linked together to a common ecosystem to be highly successful," Ye said. "Apple is currently leading this evolution, but competition is heating up on the horizon with many different OEMs looking to build their respective device and media ecosystems."

Plus, the iPad remains the top selling tablet, with more than 20 million sold since it was launched in April, 2010. However, sales of tablets declined by about 10% since early March of this year, although the iPad held the top spot, according to J.P. Morgan. The recent Android 3.0 "Honeycomb"-based Motorola Xoom tablet has had disappointing sales, as have the Samsung Galaxy Tab, Asustek Eee Pad Transformer, and RIM PlayBook, according to J.P. Morgan.

The global NAND flash memory market is expected to grow 18% this year to reach $22.0 billion in revenue, according to IHS iSuppli. Last year, the NAND flash market revenue climbed 38% to reach $18.7 billion, which was primarily caused by the success of the iPad, HIS iSuppli said.

In the new, all-digital InformationWeek Healthcare: iPads are leading a new wave of devices into the exam room. Are security, tech support, and infection control up to the task? Download it now. (Free registration required.)

Comment  | 
Print  | 
More Insights
Newest First  |  Oldest First  |  Threaded View
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
Digital Transformation Myths & Truths
Transformation is on every IT organization's to-do list, but effectively transforming IT means a major shift in technology as well as business models and culture. In this IT Trend Report, we examine some of the misconceptions of digital transformation and look at steps you can take to succeed technically and culturally.
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll