With the growing demand of iPads and iPhones, Apple takes the lead in buying semiconductors in billions of dollars among the world’s top 10 OEM semiconductor buyers in the electronics supply chain.
Apple bought $9.7 billion worth of semiconductors in 2009 and in 2010 it bought a record quantity of over $17.5 billion worth of semiconductors rivaling other brand names like HP, Samsung, Dell and Nokia. IHS noted that the growth represented the highest rate of increase so far in 2011 with a $22.4 billion purchase.
Before becoming a member of IHS, In July 2010, iSuppli predicted that Apple was likely to become the world’s top chip purchaser as Apple’s spending would increase by 54% in the same year. In 2008, Apple was the sixth in number and in 2009 it was the third largest buyer after Hewlett-Packard and Samsung electronics. The statistics shows that the gain by Apple in the listing was not unexpected.
IHS observed that Apple would continue purchasing semiconductors in the coming years at a higher rate than before. The market research company noted that Apple’s semiconductor spending will exceed still further from its rivals in the electronics industry. Apple’s leadership in semiconductor spending in 2010 is due to the success of its wireless products like the iPhone and the iPad. Wenlie Ye- an IHS analyst stated that these products consume huge quantities of NAND flash memory and Apple was the world number 1 purchaser of NAND flash in 2010.
IHS data shows that Apple placed its bets wisely. In 2010, it spent around 61% of its semiconductor spending on wireless devices like iPhone and iPads. On the other hand Hewlett-Packard dedicated its 82% of semiconductor budget on computer products such as desktops, notebooks and servers. It proved to be the right move for Apple as its Smartphone shipments grew by 62% in 2010 and iPad’s by more than 900%. In contrast, global PC shipments grew only 14.2% in 2010.
Apple’s strength in hardware sales is due to its device and media ecosystem. According to IHS, Apple leverages each device to sell other devices through its ecosystem. Rising sales leads to increased semiconductor purchasing by Apple. On the other hand, this ecosystem is lacking in a conventional PC business. In the absence of such an ecosystem, consumers prefer to buy a PC brand of their choice as there is no incentive for them to buy the same brand time and again. In this situation, a buyer who purchased Hewlett-Packard PC would likely to purchase a Dell PC next time depending upon the price.
