OEM Semiconductor Spending Grew to $240 Billion in 2011

Spending was biggest in wireless communications segment, spurred by mobile handsets and tablets
January 23, 2012 

Propelled by the red-hot appeal of  consumer electronic items like Apple Inc.s iPhone and iPad, the wireless communications sphere led all segments in OEM semiconductor-related spending for 2011, ac- counting for almost a quarter of the industrys total market of $240 billion, according to an IHS iSuppli Semiconductor Spend Analysis report from information and analysis provider IHS.

Semiconductor spending in 2011 among the industrys major original equipment manufacturers (OEM) reached $240.6 billion, up approximately 5 percent from $230.1 billion in 2010. Even though growth last year was much more modest after the significant 32 percent expansion of 2010, overall semi- conductor spending levels rose for the second straight year, and there was no indication that the industry would retrench to the dark days of 2009 when spending contracted by a steep 13 percent. Still, the ex- pansion rate of last year is not considered outstanding, and semiconductor-related spending will hover between 3 and 6 percent for this year and the next, as shown in Figure 1.

The forecast tracks the spending made on semiconductor chips by the top OEMs and brands, cover- ing a pool of 191 companies that together account for nearly 80 percent of the entire global semicon- ductor trade. An OEM or brand is assigned the entire sum of the semiconductor spending that it does by itself, or when it does so indirectly via an original development manufacturer (ODM) or electronic manufacturing services (EMS) entity that buys chips on behalf of the OEM or brand. The forecasts cover the four regions of the Americas, Japan, Asia-Pacific and the collective Europe/Middle East/Africa space known as EMEA.

Among the 10 segments being tracked for semiconductor spending, the biggest market share of 24 percent belonged to the wireless segment, with its prodigious mobile handset and tablet sales exempli fi ed b y the r un awa y success of Apple s popular offering s . Wireless will conti n ue to h a v e the lar g est g r o wth m o ving for w ard, with semiconductor spending in the area g r o wing from $58.6 billion in 2010 to $65.1 billion next yea r . A substantial po r tion of the segment s increase will be due to rising tablet sale s , though mobile handsets li k e sma r tphones will conti n ue to ta k e up the lio n s share of semiconductor segment in the wireless area.

In second place o v erall with 22 percent share in semiconductor spending but losing its top position to wireless w as the compute platfo r m segment for desktop and notebook computer s . At the apex in 2010 with $51.8 billion, the compute platfo r m in 2011 s a w spending climb b y just 4 percent to $53.7 billion, clearly la g ging behind the wireless segment s e x c e ptional 22 percent g r o wth. Desktops and notebooks h a v e stumbled in the shad o w of wireless sma r tphones and tablet s , whose po r tability and compute r -li k e features h a v e usu r ped the place of the once-mighty PC s .

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