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Apple now the largest buyer of semiconductors in the world

post #1 of 23
Thread Starter 
Apple spent some $17 billion on semiconductors in 2011, making it the largest chip customer in the world, research firm Gartner revealed on Tuesday.

Apple's ascendance to the top came with 34.6 percent growth from 2010, the largest surge of any other company among the top 10. The iPhone maker jumped two spots from third in 2010 to beat out rival Samsung and take the No. 1 position.

Apple's $17.3 billion spent on semiconductors in 2011 gave it a 5.7 percent total share of chip purchasing. Second-place Samsung bought $16.7 billion, good for 5.5 percent, while HP came in third with $16.6 billion and 5.5 percent.

The other major gainer in the top 10 was Lenovo, which saw its semiconductor purchases grow 23.7 percent from 2010 to 2011, propelling the PC maker to No. 8 on the list. The biggest loser was Nokia, which saw its semiconductor spending plummet 20.1 percent, dropping it from fourth to fifth place.

The leading electronics manufacturers accounted for $105.6 billion in semiconductor purchases in 2011. That was a year over year increase of $1.8 billion, or 1.8 percent, from 2010.

"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. Media tablets were also a growth driver for the semiconductor market throughout 2011."

Apple's performance in 2011 continued its growth pattern seen over the last five years, since the iPhone was first introduced in 2007. Gartner said Apple grained a much greater share of the smartphone market last year, while the iPad was also very successful, and the MacBook Air also increased the company's semiconductor demand.

"Given the rapidly changing competitive structure of the IT and electronics industry, no semiconductor device vendor can afford just to monitor the requirements of the current market leaders," Yamaji said. "Vendors need to be constantly looking for new market entrants who will, in turn, be tomorrow's market leaders."




Apple's considerable consumption of semiconductors may lead it to build a semiconductor development center in Israel, one rumor from last month claimed. That center could be paired up with Anobit, the Israeli flash memory component maker Apple recently purchased.

Last August, a report from IHS iSuppli said that sales of wireless semiconductors would top PCs in 2011. That means of CPUs, memory and other semiconductors have become greater for connected devices like Apple's iPhone and iPad than for traditional computers.
post #2 of 23
Quote:
Originally Posted by AppleInsider View Post

Apple spent some $17 billion on semiconductors in 2011, making it the largest chip customer in the world, research firm Gartner revealed on Tuesday.
....

So on average on everything it sells, 17% goes to Silicon? Since labor is so small, that seems rather low. On some previous breakdowns of iPhone for example, at $187 BOM, semiconductors seem to account for 40%.

http://www.isuppli.com/Teardowns/New...o-iSuppli.aspx
post #3 of 23
I am surprised that PC makers (HP, Dell, etc.) don't consume more silicon than Apple does.
post #4 of 23
Quote:
Originally Posted by Right_said_fred View Post

So on average on everything it sells, 17% goes to Silicon? Since labor is so small, that seems rather low. On some previous breakdowns of iPhone for example, at $187 BOM, semiconductors seem to account for 40%.

http://www.isuppli.com/Teardowns/New...o-iSuppli.aspx

Well, the math actually comes pretty close.

The retail price of the iPhone is about $750. 17% of that is $127.50.

Macs -- as general purpose computers -- have far more silicon than the mobile devices.

Quote:
Originally Posted by jj.yuan View Post

I am surprised that PC makers (HP, Dell, etc.) don't consume more silicon than Apple does.

The PC makers aren't pumping out hundreds of millions of mobile devices each year. This past quarter, Apple probably sold 31 million iPhones, 15 million iPods, and 13 million iPads, a total of 59 million handheld devices.
post #5 of 23
Profit Margins at 30s%
Manufacturing
Advertising
Payroll
R&D
post #6 of 23
Nah, manufacturing is baked into COGS, wouldn't be subtracted from the gross margin.

Advertising and payroll would be in SG&A. R&D is a separate line item for Apple.

Go look at their quarterly SEC filings.
post #7 of 23
Who thought this day would come, back in 1996, when Apple was literally 90-days from bankruptcy? Here's to the crazy ones, indeed. The dreamers and the doers.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #8 of 23
Quote:
Originally Posted by AppleInsider View Post

"[...] Media tablets were also a growth driver for the semiconductor market throughout 2011."

"Media tablets" being Gartner-speak for iPad and iPad clones.

Quote:
Originally Posted by AppleInsider View Post

Last August, a report from IHS iSuppli said that sales of wireless semiconductors would top PCs in 2011. That means of (sic) CPUs, memory and other semiconductors have become greater for connected devices like Apple's iPhone and iPad than for traditional computers.

All in just five years since the introduction of the iPhone, and two years since the introduction of the iPad.

Very impressive.

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post #9 of 23
Quote:
Originally Posted by SockRolid View Post

"Media tablets" being Gartner-speak for iPad and iPad clones.

I think media tablets is apropos with the others being called PC tablets since they use a traditional desktop OS. Where this will get muddy is categorizing Win8 on ARM with only the Metro UI and MS's app store, and with Android on x86 and a desktop-usable UI (IOW, mouse as input device). What will Gartner do then?

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post #10 of 23
I hope they got some fish with all them chips?
post #11 of 23
Key term: "BUYING"

Of all those listed, only Samsung manufacturers their own semiconductors.

Therefore, it doesnt need to BUY as much as others to satisfy its own demands.


If this metric was changed to total semiconductor consumption, I bet the ranking would be in favor or Samsung.

"Like I said before, share price will dip into the $400."  - 11/21/12 by Galbi

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"Like I said before, share price will dip into the $400."  - 11/21/12 by Galbi

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post #12 of 23
Quote:
Originally Posted by AppleInsider View Post

Apple spent some $17 billion on semiconductors in 2011, making it the largest chip customer in the world, research firm Gartner revealed on Tuesday.


Does Apple now have enough power to insist that some percentage of the chips that it buys come from American fabs? Chips are on of the last remaining commodities that we manufacture here.
post #13 of 23
Quote:
Originally Posted by Galbi View Post

Key term: "BUYING"

Of all those listed, only Samsung manufacturers their own semiconductors.

Therefore, it doesnt need to BUY as much as others to satisfy its own demands.


If this metric was changed to total semiconductor consumption, I bet the ranking would be in favor or Samsung.

Samsung does not just give itself components. It does not work like that. They buy them internally and that is counted in this report.
post #14 of 23
Quote:
Originally Posted by I am a Zither Zather Zuzz View Post

Does Apple now have enough power to insist that some percentage of the chips that it buys come from American fabs? Chips are on of the last remaining commodities that we manufacture here.

Apple is an international company, why do they need to buy their chips in US? Apple get less then 50% of its revenue from US.

BTW.
I want Apple to buy/build their own foundry. It would be cheaper and stop Samsung from having a free Apple roadmap.
post #15 of 23
Quote:
Originally Posted by Suddenly Newton View Post

Who thought this day would come, back in 1996, when Apple was literally 90-days from bankruptcy? Here's to the crazy ones, indeed. The dreamers and the doers.

But you forget: Apple is doomed. It does not have Adobe Flash and Android ruleZzZzZ.
post #16 of 23
Quote:
Originally Posted by Right_said_fred View Post

So on average on everything it sells, 17% goes to Silicon? Since labor is so small, that seems rather low. On some previous breakdowns of iPhone for example, at $187 BOM, semiconductors seem to account for 40%.

http://www.isuppli.com/Teardowns/New...o-iSuppli.aspx

These BOM breakdowns are just bull. They have no idea what component costs or count stuff like packaging, resarch, support and other costs.

You can see in the reports how much money makes in averege with their stuff. Apple makes about 30% in averge, that is lower then Google/MSFT/Intel.

Apple make tons of money since 30% profit on a 1000 dollar computer is more then 40% on a 400 dollar computer.
post #17 of 23
Quote:
Originally Posted by Galbi View Post

Key term: "BUYING"

Of all those listed, only Samsung manufacturers their own semiconductors.

Therefore, it doesnt need to BUY as much as others to satisfy its own demands.


If this metric was changed to total semiconductor consumption, I bet the ranking would be in favor or Samsung.

I'm not sure how this works exactly... but Samsung has many subsidiaries.

I'm pretty sure the Samsung consumer electronics division has to place an order with Samsung components division.

Or something along those lines.
post #18 of 23
Quote:
Originally Posted by Right_said_fred View Post

So on average on everything it sells, 17% goes to Silicon?

Huh? The article states 17B not 17%. I am missing something?
I’d rather have a better product than a better price.
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I’d rather have a better product than a better price.
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post #19 of 23
Quote:
Originally Posted by Right_said_fred View Post

So on average on everything it sells, 17% goes to Silicon? Since labor is so small, that seems rather low. On some previous breakdowns of iPhone for example, at $187 BOM, semiconductors seem to account for 40%.

http://www.isuppli.com/Teardowns/New...o-iSuppli.aspx

The difference is that iSuppli looking only at materials cost. That's only a fraction of the total cost - plus there's gross margin.

Let's say Apple's revenues are $100 B. Average gross margin is around 40%, so that means that total manufacturing costs are $60 B. That would mean that, on average, semiconductors are about 30% of total manufacturing cost. Total manufacturing costs include:
- semiconductors
- Hard disks
- Displays
- Cases
- Batteries
- Power supplies
- Packaging
- Overheads
- QC cost
- Rework cost
- Printed circuit boards
- Labor
and so on.

If all the non-material costs are 25% of total manufacturing cost, that would mean that materials are $45 B - in which case iSuppli's 40% figure is close.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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post #20 of 23
Quote:
Originally Posted by PhilBoogie View Post

Huh? The article states 17B not 17%. I am missing something?

Apple sales were approx 100B in 2011, so 17B in semi purchase suggests 17% of sales goes to semiconductors, ie not passives, LCD, enclosures, marketing, research, sales et.
Didn't seem quite right is all
post #21 of 23
Quote:
Originally Posted by shompa View Post

Apple is an international company, why do they need to buy their chips in US? Apple get less then 50% of its revenue from US.

BTW.
I want Apple to buy/build their own foundry. It would be cheaper and stop Samsung from having a free Apple roadmap.

I think that's the fastest way to burn through their $90+ billion cash.
post #22 of 23
Quote:
Originally Posted by Suddenly Newton View Post

Who thought this day would come, back in 1996, when Apple was literally 90-days from bankruptcy? Here's to the crazy ones, indeed. The dreamers and the doers.

Common sense is not that common. Hence Steve an others being "crazy" = alignment with common sense that intuitively resonates with a lot of people.

Eg. Steve saying "we don't make junk"... Who would've thought that's actually a good business idea? Most of us, except those in the business world who churn out rubbish and appear to make money (in the shorter term) doing so.
post #23 of 23
Quote:
Originally Posted by tooltalk View Post

I think that's the fastest way to burn through their $90+ billion cash.

Er... When you have 90 billion in cash, banks would be literally wetting themselves in guy goo trying to loan 900 billion to Apple.

That's right, if Apple were to go out and get a 1 TRILLION USD loan tomorrow, they would get it.
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