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Wednesday, March 17, 2010

HP and Samsung lead rise in semiconductor spend

Apple rises as OEM spend grows 13% in 2010   

OEM semiconductor spend 2010 ($m)

Semiconductor spending in 2010 among Original Equipment Manufacturers (OEM) and Electronic Manufacturing Service (EMS) providers will post double-digit increases, reversing the cut in tspending over the last year and pointing to a more considered upturn.
Among electronic equipment OEMs, spending in 2010 will rise to $177.9 billion, up 13 percent from $157.0 billion in 2009. iSuppli forecasts that the total spend by EMS providers in 2010 will amount to $37.7 billion, up 15.1 percent from $32.8 billion in 2009.The rise in spending among OEMs assumes the inclusion of all chips consumed by end products regardless of how the chips are purchased—including OEM direct purchases as well as procurement conducted through EMS or distributors.

OEMs jockey for top spot in semiconductor spending
“The increase in OEM semiconductor spending in 2010 represents a turnaround for the market from 2009,” said Min-Sun Moon, senior analyst for semiconductor spend and design at iSuppli. “Spending last year plunged by 16.1 percent—due not only to a decline in the average selling price of chips but also because of a drop in shipments. Although still cautious, electronic OEMs this year are gearing up to gain more share in their respective markets—a strategy that will translate into greater semiconductor spending.”

Hewlett-Packard in the lead
Hewlett-Packard is projected to be the top OEM semiconductor spender in 2010, a position it will retain after taking the No.-1 spot away from Nokia, which fell to third place in 2009. HP will spend an estimated $12.6 billion this year, compared to $10.99 billion in 2009.
In second place among top OEM spenders for 2010 will be Samsung Electronics, expected to spend $12.5 billion, compared to $10.3 billion last year. Notwithstanding its runner-up ranking for two consecutive years, Samsung is projected to take over the No.-1 title in 2011, thanks to its broad range of businesses—including new wireless handsets, thin LED-backlit TVs and 3-D TVs—that will drive increased semiconductor spend for the company.
Following Nokia in third place, Apple will become the fourth largest spender in 2010, moving past Dell. Though not even appearing in the ranks of the Top-10 semiconductor purchasers before 2006, Apple started advancing after introducing the iPhone in 2007 and is expected to surpass Nokia to land at No. 3 in 2011.
The attached figure presents the world’s Top-20 OEMs ranked by semiconductor spending in 2010.

EMS on the rise
Among EMS providers, the projected rise in spending this year follows a significant drop in revenue for the group in 2009 due to big declines in OEM shipment orders. However, large providers can expect to recover quickly in 2010. The top EMS spenders in 2010 will include Foxconn, Flextronics, Jabil Circuit and Celestica.
For No.-1 Foxconn, spending will reach $22.6 billion in 2010, up 18.7 percent from $19.0 billion in 2009, boosted by the company’s manufacturing of HP products, Nintendo’s Wii, Sony’s PlayStation 3 and Apple’s iPod, iPhone and the soon-to-be-released iPad.
Following Foxconn in second place will be Flextronics, projected to spend $7 billion in 2010, up 8.8 percent from $6.4 billion last year. The EMS giant, headquartered in Singapore and whose clients include Sony Ericsson, HP and Research In Motion, will continue to expand manufacturing facilities in China.
The biggest markets for EMS providers include compute platforms and wireless communications. However, the share of smaller markets will increase over time, indicating that OEMs will start outsourcing other types of products besides computers and handsets.
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