Apple chip spend surge

Apple is set to become the world’s second-largest OEM semiconductor buyer in 2011, potentially positioning the company to become the world’s top chip purchaser in 2012, on the back of its success with the iPhone and other products according to iSuppli.

With projected semiconductor spending in 2011 of $16.2bn, Apple will leap over Samsung Electronics, which will drop to the third spot after finishing with $13.9bn. Apple’s one-step rise in the rankings will move the company to a close second place behind Hewlett-Packard, which will retain its number-one ranking next year thanks to $17.1bn in spending.

“Leadership in semiconductor spending represents a position of prestige,” said Min-Sun Moon, senior analyst for semiconductor spend and design at iSuppli. “An advancement in the rankings means that a company has been successful in introducing new products and that it is allocating more dollars in research and development—two factors that, incidentally, feed innovativeness as well.”

In Apple’s case, she said, the move to second place reflects the company’s triumph in the iPhone 4 and iPad, two flagship products that have captured the public’s imagination—and have garnered tremendous sales—on a scale unequaled by rival devices.

“Apple’s expected rise to number two—eclipsing Samsung and putting it within a hair’s breadth of Hewlett-Packard—means that the company’s investment in its new smart phone and tablet has paid off—and will continue to do so for some time to come,” Moon noted.

Apple recorded a surprising 13 per cent expansion in semiconductor spending—a year when most manufacturers posted negative growth. This year, spending by Apple will expand by a staggering 54.0 per cent to reach $12.4bn—the highest growth rate predicted for any company. Next year, spending levels will by augmented by another 30.4 per cent for the company to catapult to its vaunted second-place finish.

Barring any unforeseen mergers and acquisitions by current champion Hewlett-Packard, Moon surmised, Apple could well snag the top spot as soon as 2012, ousting a company that has held down the pinnacle since early this millennium.
For 2010, a number of OEM companies are set to join Apple and post rapid growth in semiconductor spending levels, iSuppli data show. The next five companies following Apple, in descending order, are Lenovo Group at 47.1 per cent; SanDisk at 44.3 per cent; Research in Motion at 42.9 per cent; Cisco Systems at 37.3 per cent; and Acer at 29.4 per cent.

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