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Chip spending could reach double-digit growth this year

Manufacturers say they'll step up their spending on semiconductors, helping the chip industry stage a healthy recovery this year after a sluggish 2009, says iSuppli.

Lance Whitney Contributing Writer
Lance Whitney is a freelance technology writer and trainer and a former IT professional. He's written for Time, CNET, PCMag, and several other publications. He's the author of two tech books--one on Windows and another on LinkedIn.
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Lance Whitney
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Following a weak market in 2009, the semiconductor industry will be the beneficiary of double-digit spending gains this year, says new research unveiled Thursday by iSuppli.

Original equipment manufacturers (OEMs) are expected to boost their chip spending 13 percent to $177.9 billion in 2010, while electronic manufacturing service (EMS) providers will spend $37.7 billion this year, a gain of 15.1 percent from 2009.

Among OEMs, Hewlett-Packard will be the top spender on semiconductors this year, says iSuppli, paying around $12.6 billion for its stock of chips. In second place will be Samsung Electronics, spending $12.5 billion, followed by Nokia and then Apple.

In 2011, Samsung is likely to take the lead in spending as it unveils a host of new products ranging from wireless handsets to 3D TVs. And bumping Nokia for the No. 3 spot next year will be Apple, which has boosted its chip spending since the debut of the iPhone in 2007.

iSuppli

EMS providers, which make electronic components for OEMs, survived a tough 2009 as customer orders plummeted. But as demand rises this year, the EMS market is expected to stage a quick rebound. OEMs are also expected to begin outsourcing other products beyond just computers and mobile phones, providing additional revenue to EMS companies.

Foxconn, whose Innolux subsidiary is making the glass panels used in Apple's new iPad, will spend $22.6 billion on semiconductors this year, a rise of 18.7 percent from 2009, says iSuppli. The company also supplies components for the iPod, the Nintendo Wii, Sony's PlayStation 3, and a variety of Hewlett-Packard products.

Following Foxconn will be Flextronics in second place, likely to spend $7 billion on chips in 2010, notes iSuppli. With increased business from Sony Ericsson, HP, and Research In Motion, Flextronics is also expected to expand its manufacturing plants in China.