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iPhone, iPad boost chip sales for wireless devices

Led by Apple, manufacturers are spending more cash buying semiconductors for wireless devices than for computers this year, says a report from IHS iSuppli.

The demand for smartphones and tablets is causing manufacturers to spend more on chips for wireless devices than for traditional computers, says a report out yesterday from IHS iSuppli.

As the tech industry shifts more of its emphasis from PCs to mobile gadgets, the wireless segment is poised to become the leading market for chip buying starting this year.

Manufacturers will buy $55.4 billion of semiconductors for wireless devices this year, a jump of 10.7 percent from 2010, according to IHS. But spending on chips for computers will reach $53.1 billion this year, a gain of just 1.2 percent from last year.

IHS iSuppli

"Led by Apple Inc.'s iPhone and iPad, demand is booming for smartphones and tablet devices," IHS semiconductor analyst Wenlie Ye said in a statement. "This is spurring a surge in sales of semiconductors used in wireless devices, including baseband chips, applications processors, and mobile memory. With overall sales growth for PCs slowing, the balance of power in the semiconductor industry is shifting toward the wireless segment."

Apple has been a huge contributor to that shift. Driven by demand for the iPhone and iPad, Apple became the world's largest OEM semiconductor buyer last year, moving past long-time leader Hewlett-Packard.

That swing is significant since Apple is more of a wireless device seller, spending 61 percent of its chip budget last year on mobile devices. In contrast, HP is primarily a PC maker, allocating 82 percent of its chip budget in 2010 for desktops, laptops, and servers. Apple is expected to further outpace HP in chip spending both this year and next, IHS noted.

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The wireless market as defined by IHS includes not just mobile phones and tablets but also routers, base stations, and related gear.

Although semiconductor spending for PCs has been hit by slower growth, the segment is still alive and kicking. Notebook sales in particular continue to rise, ensuring that PC-related chip buying isn't likely to shrink significantly over the foreseeable future, added IHS.