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Apple becomes largest semiconductor customer

Company holds 5.7% market share, closely chased by Samsung with 5.5%

Apple has become the biggest customer of semiconductor chip vendors in 2011.
Apple has become the biggest customer of semiconductor chip vendors in 2011.

Apple became the biggest customer of semiconductor chip vendors in 2011, with a 5.7% market share, showing 34.6% growth since 2010. The company climbed two places in the top 10 market share ranking, from third in 2010, according to Gartner.

Apple also gained a much greater share of the smartphone market, and its media tablet business was also highly successful in 2011

Smartphones, media tablets and solid-state drives drove growth in the semiconductor industry in 2011 and leading electronic equipment manufacturers accounted for $105.6 billion of semiconductors on a design total available market (TAM) basis - 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."

While DRAM prices fell drastically in 2011, and many PC vendors decreased their total semiconductor demand, the success of Apple's MacBook Air enabled the company to increase semiconductor chip demand even in its PC business.

Within the top 10 rankings, Samsung came in second place, closely chasing Apple with 5.5% market share, followed by HP, Dell, Nokia, Sony, Toshiba, Lenovo, LG and Panasonic.

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

Yamaji said that 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.

"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 US, while also establishing a strong distribution network in China."