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Thursday, July 26, 2012, 06:58 am PT (09:58 am ET)

Apple remains world's largest chip buyer, projected to spend $28B this year

Apple continues to dominate the global electronics supply chain, and is expected to widen its lead as the largest buyer of chips by spending $28 billion in 2012.

The latest data from IHS iSuppli forecasts that Apple's chip expenses will increase by 15.1 percent in 2012, up from the $24.3 billion the company spent in 2011. That will widen Apple's lead over Samsung, which is expected to spend $14.9 billion on semiconductors this year, up just 0.3 percent from 2011.

Half of the companies in iSuppli's top 10 are expected to decrease their spending on semiconductors in 2012. Hewlett-Packard, Dell, Panasonic, Cisco Systems and Fujitsu are all expected to reduce their chip expenses this year.

iSuppli that Apple's lead in semiconductor purchasing has been maintained because the company continues to see strong demand for its products, and has also maintained what were referred to as "beneficial relationships" with more than 150 suppliers.

"It’s well known that Apple has already conquered the smartphone and tablet segments—but behind the scenes the company is engaging in another kind of conquest: the dominance of the electronics supply chain," said Myson Robles-Bruce, senior analyst for semiconductor spending and design activity at IHS. "Such a dominant position provides critical benefits, allowing one to dictate semiconductor pricing, control product roadmaps and obtain guaranteed supply and delivery. For Apple, these benefits translate into competitive advantages, letting it offer more advanced products at lower prices, faster and more reliably than the competition."

iSuppli


Apple's projected 15.1 percent growth in chip expenses in 2012 is more than three times greater than the next-fastest-rising purchaser, Canon, which is expected to see a 4.6 percent increase this year.

And in a more long-term forecast, Apple is expected to once again grow its chip purchasing in 2013 by 12.3 percent. The iPhone maker is expected to remain the top buyer of semiconductors and to once again see the greatest growth among the top 10 chip purchasers next year.

"Apple will continue to outgrow the other major OEMs in chip purchasing because of its clear vision of the future, which extends a few years out," Robles-Bruce said. "This vision includes a strategy to not only update currently popular products but also achieve success in other areas of interest like the television segment."

Earlier this year, iSuppli identified Apple as leading the global trend in chip expenditures migrating to wireless devices. Aided by strong sales of Apple's products like the iPhone and iPad, smartphone and tablet semiconductors now exceed sales of traditional computer chips.

In January, Gartner identified that Apple had become the world's largest buyer of semiconductors. It estimated that Apple spent $17 billion on semiconductors in 2011, representing 34.6 percent growth from the previous year.