Samsung, Apple Top Semiconductor Buyers Ranking in 2017

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Samsung Electronics and Apple Inc. boosted their semiconductor spend in 2017, extending their lead as the top two semiconductor buyers in 2017, according to Gartner Inc.’s latest spending report. Together, the companies account for 19.5 percent of the total global market, spending $81.8 billion on semiconductors last year. This is up from more than $20 billion in 2017.

"Samsung Electronics and Apple not only retained their respective No. 1 and No. 2 positions, they also radically increased their share of semiconductor spending through 2017," said Masatsune Yamaji, principal research analyst at Gartner, in a statement. "These two companies have held on to the top positions since 2011 and they continue to exert significant influence on technology and price trends for the whole semiconductor industry."

The huge price increases of memory devices, particularly DRAM and NAND flash, in 2017 was a contributing factor on the semiconductor buyers’ ranking as well as on the dollar spend. The average selling price (ASP) for DRAMs rose by more than 40 percent in 2017 while NAND flash ASPs increased by nearly 40 percent during the same period, according to DRAMeXchange.

Most OEMs could not avoid the risk of a memory chip shortage and rise of memory prices through 2017, said Gartner. But memory devices weren’t the only component markets that faced supply shortages and higher tags over the past year. Buyers also had to deal with supply issues and rising costs for microcontrollers, discrete semiconductors, power semiconductors, and passive components.

Gartner also reported that some OEMs are differentiating their products with their own captive silicon solutions. “The increase in OEMs' captive chip spending is a great risk for commercial chip vendors' future growth,” said Gartner.

For example, Dialog Semiconductor supplies Apple, its largest customer, with custom PMICs for a range of platforms. However, the company recently said it “recognizes Apple has the resources and capability to internally design a PMIC and could potentially do so in the next few years.”

Dialog doesn’t expect its 2018 business with Apple to be impacted if the company decided to design its own PMIC.

Semiconductor spending by the top 10 OEMs increased significantly from 31 percent of the total semiconductor market 10 years ago to a 40 percent share in 2017. Gartner predicts that the top 10 OEMs will account for more than 45 percent of global semiconductor spending by 2021.

This year’s ranking indicates that eight of the top 10 companies in 2016 remained in the top 10 in 2017, with no changes in the top five ranking. The changes included newcomer Western Digital, rising to the number 10 position thanks to its increased semiconductor spend of $1.7 billion, while LG Electronics rejoined the top 10. BBK Electronics rose to the sixth position, up from number five, increasing its semiconductor spending by $5.7 billion.

Table 1. Preliminary Ranking of Top 10 Companies by Semiconductor Design TAM, Worldwide, (Millions of Dollars)

TAM = total available market

Source: Gartner (January 2018)

"With the top 10 semiconductor chip buyers commanding an increasing share of the market, technology product marketing leaders at chip vendors must focus on their leading customers," said Yamaji. "They will need to prioritize direct sales and technical support resources to these top customers by exploiting online technical support capabilities and outsourcing the support for long-tail customers to third-party partners and distributors."