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 industry’s 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 industry’s 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 exemplified by the runaway success of Apple’s popular offerings. Wireless will continue to have the largest growth moving forward, with semiconductor spending in the area growing from $58.6 billion in 2010 to $65.1 billion next year. A substantial portion of the segment’s increase will be due to rising tablet sales, though mobile handsets like smartphones will continue to take up the lion’s share of semiconductor segment in the wireless area.
In second place overall with 22 percent share in semiconductor spending but losing its top position to wireless was the compute platform segment for desktop and notebook computers. At the apex in 2010 with $51.8 billion, the compute platform in 2011 saw spending climb by just 4 percent to $53.7 billion, clearly lagging behind the wireless segment’s exceptional 22 percent growth. Desktops and notebooks have stumbled in the shadow of wireless smartphones and tablets, whose portability and computer-like features have usurped the place of the once-mighty PCs.
Two segments tied for third place in 2011, each with a market share of 15 percent. Of the two, the compute peripherals segment fared better with devices such as disk drives, printers and monitors; semi- conductor spending in the space grew 7 percent to $35.0 billion during 2011. In contrast, even though the consumer segment also had 15 percent share in 2011, semiconductor spending declined there by nearly 3 percent to $36.4 billion, down from $37.4 billion. The consumer segment includes devices like flat-panel televisions, set-top boxes, DVD/Blu-ray players, digital still cameras, gaming consoles, portable media players and appliances.
Three other segments joined the consumer sector in posting decreases in semiconductor spending last year: automotive electronics; military/aerospace; and perhaps the most distressed area of all, the wired communications sector, where semiconductor spending started declining in 2010 and will continue to do so until 2013. Each of the three segments claimed less than 10 percent share of semiconductor spending.
The remaining portion of semiconductor spending in 2011 was split up among three more small sectors, with each account- ing for less than 5 percent market share. However, despite miniscule share, the three segments—includ- ing power, medical electronics and industrial electronics—all saw pos- itive growth last year, adding their numbers to an overall encourag- ing picture for the year just ended. Figure 2 shows how semiconduc- tor spending in 2011 was allocated among all competing 10 segments.
In the fast-growing tablet space, Apple spent more than any other manufacturer in tablet-relat- ed semiconductor spending, to the tune of $4.6 billion last year. To be sure, the iPad continues to be un- matched in its class despite earnest
efforts from rival products to loosen its hold on the market, and tablets like the Playbook by Research In Motion Ltd. or the Xoom from Motorola Inc. have yet to gain significant traction since launching to compete with Apple’s seemingly impregnable offering. Samsung Electronics Co. Ltd. was a very distant second after Apple as the biggest spender on tablets in 2011 with $603.2 million, followed by HTC Corp. from Taiwan with $199.2 million.
The projected rise this year in semiconductor spending matches the rate of expansion anticipated by the semiconductor industry, expected to grow in 2012 at a sluggish 3 percent to $318.2 billion.