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Old Jan 24, 2012, 11:16 AM   #1
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Apple Ranked as World's Top Semiconductor Customer in 2011




Back in June of last year, IHS iSuppli reported that Apple had become the world's largest buyer of semiconductors in 2010, jumping past HP and Samsung to top the list with $17.5 billion in spending. Apple's lead was expected to grow in 2011 on continued strength of the iPhone, iPad, and MacBook Air, all of which contain substantial NAND flash memory, which has become a primary driver of semiconductor markets due to the booming mobile device landscape.

Research firm Gartner is out today with a new report that appears to utilize a somewhat different methodology in calculating semiconductor expenditures but which now comes to the same conclusion as IHS Suppli's earlier report. According to Gartner, Apple became the world's largest semiconductor customer in 2011 as measured by total silicon content in all products designed by Apple and its competitors, known as Design TAM.




Gartner pegs Apple's year-over-year growth for 2011 at 34.6%, easily topping the growth of other top semiconductor customers and allowing it to leapfrog Samsung and a sliding HP for the top spot in the rankings. According to the report, semiconductor purchases for Apple's products came in at $17.3 billion in 2011, ahead of Samsung's $16.7 billion and HP's $16.6 billion purchases.

iSuppli's report from last year highlighted the vast differences in Apple's and HP's markets, with Apple's semiconductor usage being driven by mobile devices and HP's by traditional computer products. Gartner notes that mobile devices and solid-state drives are indeed now the major drivers of semiconductor usage.
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"The major growth drivers in 2011 were smartphones, media tablets and solid-state drives (SSDs)," said Masatsune Yamaji, principal research analyst at Gartner. "Those companies that gained share in the smartphone market, such as Apple, Samsung Electronics and HTC, increased their semiconductor demand, while those who lost market share in this segment, such as Nokia and LG Electronics, decreased their semiconductor demand.
Gartner distinguishes Design TAM from Purchasing TAM, which would attribute to a given company only the amount actually purchased by the company. As an example of the difference between the two metrics, semiconductors purchased by a third-party manufacturing partner would generally count toward the primary company's Design TAM but not its Purchasing TAM.

Article Link: Apple Ranked as World's Top Semiconductor Customer in 2011
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Old Jan 24, 2012, 11:23 AM   #2
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I suppose the difference between "Top Semiconductor customer" and "Top Semiconductor user" would be that the second category counts when a Samsung device uses Samsung semiconductors, while the first category doesn't. So Apple was the top _customer_ in 2010, but in 2011 they are also the top _consumer_.

And Nokia must be worried.
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Old Jan 24, 2012, 11:33 AM   #3
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Paying out dividends don't buy semiconductors to fuel growth/demand.
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Old Jan 24, 2012, 11:33 AM   #4
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Nokia was already worried. Fortunate for them, their forthcoming windows phone devices look really great. I would put them second to only apple in terms of aesthetics (I think they have higher build quality).

Still, Apple is garnering a lot of number 1 spots. Highest market cap, number one semiconductor consumer. Is number 1 PC vendor on the horizon?
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Old Jan 24, 2012, 11:34 AM   #5
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And Nokia must be worried.
And Elop. Anyone tying their future to Ballmer's needs their head checked.
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Old Jan 24, 2012, 11:37 AM   #6
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Ha, Nokia
I remember when we used to use their cellphones.
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Old Jan 24, 2012, 11:56 AM   #7
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and with smartphone and tablet adoption still at the growth stages, can you image what it will be like in 2-3 years!



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Old Jan 24, 2012, 11:57 AM   #8
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Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_2_1 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8C148 Safari/6533.18.5)

Its just a fraction of their Lawyer bill tho.
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Old Jan 24, 2012, 12:01 PM   #9
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Apple is the #1 semiconductor customer, and they have started moving their semiconductor purchases away from Samsung. That's gotta hurt Samsung.
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Old Jan 24, 2012, 12:08 PM   #10
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another in a long string or reports where Apple not only comes out at the top of the list but also has grown significantly where others are shrinking. How close are we getting to total world domination??
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Old Jan 24, 2012, 12:14 PM   #11
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Originally Posted by FloatingBones View Post
Apple is the #1 semiconductor customer, and they have started moving their semiconductor purchases away from Samsung. That's gotta hurt Samsung.
Apple accounts for just 5% of Samsung revenue and they have a lot more ways to hurt Apple than Apple do.
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Old Jan 24, 2012, 12:19 PM   #12
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Originally Posted by george-brooks View Post
another in a long string or reports where Apple not only comes out at the top of the list but also has grown significantly where others are shrinking. How close are we getting to total world domination??
apple buys the most because they pay for someone else to do it all for them. better yet.... YOU pay the added costs of someone making it for them. its all hidden within the apple tax they add to the price at the end.

samsung sells more phones in a year than apple sells products.

in other words... i wouldnt brag about apple being at the top of this list.
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Old Jan 24, 2012, 12:21 PM   #13
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Originally Posted by FloatingBones View Post
Apple is the #1 semiconductor customer, and they have started moving their semiconductor purchases away from Samsung. That's gotta hurt Samsung.
Good luck finding someone who can can provide you with a better yield. They are the only company to make profits from DRAM/NAND even though there was massive fall in prices.

More than $40 billion investment planned in 2012 - when all other companies are reducing their investments. The Texas plant was upgraded recently with an investment of additional 3.6 billion. They are already moving towards 22nm process 5.5G line for OLEDs. Please try finding someone who can give Apple this kind of output and capacity.

http://www.reuters.com/article/2012/...80G00W20120117
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Old Jan 24, 2012, 12:59 PM   #14
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Originally Posted by lilo777 View Post
Apple accounts for just 5% of Samsung revenue
Five years ago, Samsung Electronics was far larger than Apple. Today, Samsung Electronics a market cap of 162.8T Won (about $144B); AAPL has a market cap over $393B. Apple has left them in the dust in the last five years.

Apple's appetite for commodity parts continues to grow. Do you have any sound-bite from any Samsung execs that they don't care about orders from the most biggest electronics company in the world? I didn't think so.

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and they have a lot more ways to hurt Apple than Apple do.
Do you have any specifics, and do you have any measures that Samsung has actually been effective?

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Good luck finding someone who can can provide you with a better yield. They are the only company to make profits from DRAM/NAND even though there was massive fall in prices.
The great thing about commodity markets is that they're always changing.

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Please try finding someone who can give Apple this kind of output and capacity.
We don't have to. AAPL is already looking and will work to ensure they have a diversity of suppliers for all their commodity parts. They've got boatloads of liquidity -- far more than Samsung -- and are not afraid to use it. We shall see in quarterly reports if Samsung's investments prove wise or they suffer a decline in revenue. The numbers will tell the story.
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Old Jan 24, 2012, 01:06 PM   #15
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Apple is the #1 semiconductor customer, and they have started moving their semiconductor purchases away from Samsung. That's gotta hurt Samsung.
And yet Apple still only has a small part of the market. Apple is very replaceable in terms of customers. There still is a shortage of semiconductors so it is not like Samsung would have a had time finding new clients to replace apple and they might even make more money in doing it.
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Old Jan 24, 2012, 01:08 PM   #16
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Originally Posted by FloatingBones View Post
Five years ago, Samsung Electronics was far larger than Apple. Today, Samsung Electronics a market cap of 162.8T Won (about $144B); AAPL has a market cap over $393B. Apple has left them in the dust in the last five years.
When it comes to company size market capitalization means very little (not to shareholders, obviously). Samsung is a much larger company in terms of revenues, number of employees, number of patents etc.
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Old Jan 24, 2012, 01:16 PM   #17
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Apple benefit from Samsung by able to assemble large amount of iproducts we buy.

Samsung invest the Apple income in to produce better screen and semiconductor technology. Result, we the consumer have more advanced toy to play with every year.

There really is no need to debate who can hurt whom the most.

P.S. go Lenovo, I love their Thinkpad range.

Last edited by 88 King; Jan 24, 2012 at 02:51 PM.
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Old Jan 24, 2012, 01:18 PM   #18
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Originally Posted by hot spare View Post
Good luck finding someone who can can provide you with a better yield. They are the only company to make profits from DRAM/NAND even though there was massive fall in prices.

More than $40 billion investment planned in 2012 - when all other companies are reducing their investments. The Texas plant was upgraded recently with an investment of additional 3.6 billion. They are already moving towards 22nm process 5.5G line for OLEDs. Please try finding someone who can give Apple this kind of output and capacity.

http://www.reuters.com/article/2012/...80G00W20120117
If all other companies are reducing their investments then it's game over. Apple will be selling 80% of all smartphones by 2013.
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Old Jan 24, 2012, 01:21 PM   #19
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this just illustrates to me that apple needs to start their own plants for making semiconductors and other pieces of their products. there are added costs to buying from someone else, but keeping it an in-house thing should help reduce costs which we could only hope would eventually be passed onto the consumers, but probably not.
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Old Jan 24, 2012, 01:21 PM   #20
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If all other companies are reducing their investments then it's game over. Apple will be selling 80% of all smartphones by 2013.
He ment semiconductor fabrication companies, nothing to do with mobile phone manufactures.
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Old Jan 24, 2012, 01:27 PM   #21
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He ment semiconductor fabrication companies, nothing to do with mobile phone manufactures.
No I mean Apple will be selling most smartphones, tablets by 2013. This is a fact if you look at the evidence of what is happening with Apple to spend $40 billion this year and other companies reducing. It's a death spiral for their competition now.
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Old Jan 24, 2012, 01:29 PM   #22
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Originally Posted by FloatingBones View Post
We don't have to. AAPL is already looking and will work to ensure they have a diversity of suppliers for all their commodity parts. They've got boatloads of liquidity -- far more than Samsung -- and are not afraid to use it. We shall see in quarterly reports if Samsung's investments prove wise or they suffer a decline in revenue. The numbers will tell the story.
Funny you mention it because it looks like even though Apple was willing to drop a billion $ into Sharps' laps, it still couldn't actually get rid of samsung as their supplier for ipad3 (unconfirmed of course).
Sure the report is unconfirmed and Apple will keep trying most likely but had to throw it out there.

http://www.supplychaindigital.com/pr...3-supply-chain
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Old Jan 24, 2012, 01:32 PM   #23
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No I mean Apple will be selling most smartphones, tablets by 2013. This is a fact if you look at the evidence of what is happening with Apple to spend $40 billion this year and other companies reducing. It's a death spiral for their competition now.
I don't see Apple sell majority of iPhones in the smart phone market, not with Android dominate most market especially in developing counties.

The tablet market is another story. I've flashed ICS on my Galaxy Tab, and I don't see how any ICS tablet can improve Android presence in the table market unless their start to under cut the ipad like the Kindle.
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Old Jan 24, 2012, 01:46 PM   #24
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When it comes to company size market capitalization means very little (not to shareholders, obviously). Samsung is a much larger company in terms of revenues, number of employees, number of patents etc.
Actually, the most important number to investors is profit. AAPL has already exceeded the profit of Samsung ($14.01B vs $13.66B; source here). The story the numbers say is that Samsung Electronics invests far more money to get far less profit. Doing it with far fewer employees is a good thing -- AAPL has an incredible revenue per employee.

AAPL has succeeded in separating the high-profit areas of consumer electronics from the commodity parts. Samsung has not -- while they sell consumer electronics, the lion's share of their numbers come through commodity parts. And many of Samsung's consumer electronics (e.g., smartphones) are using commodity operating systems. Samsung may win on the number of commodity smartphones they churn out, but Apple dominates on smartphone profits.

That is part of why Apple's market capitalization is far higher than Samsung's.
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Funny you mention it because it looks like even though Apple was willing to drop a billion $ into Sharps' laps, it still couldn't actually get rid of samsung as their supplier for ipad3 (unconfirmed of course).
Sure the report is unconfirmed and Apple will keep trying most likely but had to throw it out there.
That's fair. But it does show that AAPL is willing to front large capital investments to diversify its suppliers. While those parts (allegedly) are not ready for the (rumored) iPad 3, they may well show up in future products.

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I don't see Apple sell majority of iPhones in the smart phone market, not with Android dominate most market especially in developing counties.
Agreed. Commodity android cell phones will probably dominate in developing countries and maybe even the prepaid market in the US. An Android cell phone is a tremendous improvement over the commodity cell phones from a few years ago. AAPL has never been interested in the low end of the markets.

Quote:
The tablet market is another story. I've flashed ICS on my Galaxy Tab, and I don't see how any ICS tablet can improve Android presence in the table market unless their start to under cut the ipad like the Kindle.
Interesting. Part of AAPL's value is that many iPad apps operate seamlessly with the iPhone version of the app (which is often the same app). A true competitor to AAPL must have viable offerings for all the types of consumer electronic devices.

Last edited by FloatingBones; Jan 24, 2012 at 02:04 PM. Reason: Added my reply to 2 other comments
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Old Jan 24, 2012, 01:47 PM   #25
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this just illustrates to me that apple needs to start their own plants for making semiconductors and other pieces of their products. there are added costs to buying from someone else, but keeping it an in-house thing should help reduce costs which we could only hope would eventually be passed onto the consumers, but probably not.
Not necessarily. Moving things in house isn't always a cheaper option. Which is why these things get outsourced in the first place.
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