Apple is the biggest chip buyer -- and getting bigger

Apple buys about 50 percent more memory, processors, and other semiconductor products than its nearest rival, Samsung -- which, by the way, isn't just a buyer, but also the second-biggest producer.

Apple dominates semiconductor spending and will continue to next year, IHS iSuppli predicts.
Apple dominates semiconductor spending and will continue to next year, IHS iSuppli predicts. IHS

PARIS -- Apple is the biggest buyer of microprocessors today -- and it's getting bigger.

The semiconductor industry produces all kinds of chips for memory, running software, communicating over networks, and more. And Apple, by virtue of its booming iPhone and iPad business, is a voracious consumer, said Dale Ford, head of IHS iSuppli's electronics and semiconductor research business. Samsung is in second place, and also growing fast, he added, speaking at the analyst firm's Technology, Media and Telecommunications (TMT) Summit here.

In 2009, Apple was one of the herd, spending about $9 billion on semiconductors. This year, that figure should rise to a whopping $27 billion. By 2013, Ford said, Apple will spend about $29 billion.

Samsung, while still well ahead of its rivals, trails Apple considerbly in it chip spending. Its purchases should rise from about $10 billion in 2009 to $18 billion in 2013, he said.

These two juggernauts are big enough to disrupt others' businesses, even if they're not competitors.

"Pretty much everybody has to take pretty conscious account of where Apple and where Samsung will be," Ford said of companies vying for the same components. "In industrial, automotive, and every other sector, their reach, influence, and size has been a significant change."

IHS iSuppli semiconductor analyst Dale Ford
IHS iSuppli semiconductor analyst Dale Ford Stephen Shankland/CNET

Last year was a tough one for the semiconductor industry because of Japan's earthquake and Thailand's flooding. Some in the industry were pleased at how well things worked out, all things considered. But Ford urged managers not to get complacent, because those disasters struck during seasonal lulls and at a time when extra inventory was still moving through the pipeline.

"If either of those disasters had taken place in August, we would have experienced much greater pain," he said.

Intel remains king of the heap in the semiconductor market, accounting for about 15 percent of its revenue in the fourth quarter of 2011. Samsung, at about 9 percent, was in second place, marking it a both a major supplier an a huge customer.

Intel, though, can't be complacent, Ford said -- not with the mobile revolution sweeping across the computing industry and Intel still largely absent. "Intel has no room to sit comfortably moving forward. they recognize the mobile trends," he said.

Intel is top dog when it comes to semiconductor sales, but it's weak in the mobile market.
Intel is top dog when it comes to semiconductor sales, but it's weak in the mobile market. IHS

Sales in the overall semiconductor market were $311 billion in 2011, and eventually should cross $400 billion, Ford predicted. While that figure is a small fraction of the overall $143 trillion world economy, semiconductors hold disproportionate influence.

There are many other sectors in the economy, and "in every one of these sectors we are a key enabler of success in the growth of the economy in our world today," Ford said

 

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