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Apple expected to spend $27 billion on semiconductors in 2012

post #1 of 17
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A new analysis expects Apple to remain the the world's biggest chip buyer this year, projecting $27 billion worth of semiconductor purchases from the company in 2012.

Dale Ford, IHS iSuppli's head of electronics and semiconductor research, made the prediction at the firm's Technology, Media and Telecommunications Summit, CNet reported on Tuesday. According to him, Apple is set to maintain a huge lead on second-place Samsung through at least 2013.

Apple jumped up from being the third-largest buyer of semiconductors in 2009 to the front of the pack in 2010. The firm estimates Apple spent $23 billion on semiconductors in 2011, over 50 percent more than its closest rivals. Ford noted that Apple's microprocessor spending has risen from $9 billion in 2009 to a projected $27 billion this year and $29 billion next year.

Meanwhile, Samsung was said to have spent $15 billion on chips in 2011. Looking ahead, the South Korean electronics maker is expected to purchase about $16 billion worth of semiconductors in 2012 and $18 billion next year. Samsung's case is unique in that is both one of the largest consumers and suppliers of semiconductors in the world.

Pretty much everybody has to take pretty conscious account of where Apple and where Samsung will be," Ford reportedly said. "In industrial, automotive, and every other sector, their reach, influence, and size has been a significant change."

IHS iSuppli semiconductor estimates
Credit: IHS iSuppli, via CNet


As for suppliers, Intel still remains the largest chipmaker with about 15 percent share of the semiconductor market, which was estimated to be $311 billion last year. Samsung came in second with 9 percent of the market.

IHS iSuppli's numbers differ from estimates released by market research group Gartner earlier this year. According to those figures, Apple spent $17 billion in 2011, compared to Samsung's $16.7 billion.

Separately, analysts have been taking note of Apple and Samsung's combined size. A note from Barclays Equity Research on Tuesday examined which industries and companies will be affected by continued growth from the two giants. Analyst Ben Reitzes outlined certain suppliers producing semiconductors, displays and communications equipments that will benefit from Apple, while noting that companies like Dell, Hewlett-Packard, Microsoft, Research in Motion and Nokia will be "challenged" as they compete against Apple and Samsung.

As Apple's multiple device strategy has taken shape in recent years, the company has been steadily acquiring semiconductor-related assets. In 2008, Apple's then CEO Steve Jobs declared that the company was setting out to design its own iPhone and iPod chips with the help of P.A. Semi, a fabless semiconductor company that it acquired earlier that year.

Aided by a later purchase of chipmaker Intrinisty, Apple designed the A4 system-on-a-chip processor that made its way into the original iPad and iPhone 4 in 2010. The Cupertino, Calif., company also holds a minority stake in Imagination Technologies, the chip designer that has provided graphics processors for its A-series chips.

More recently, Apple purchased Anobit, an Israel-based flash memory component maker. As growing sales of the iPhone and iPad increase Apple's flash memory needs, Anobit's "Memory Signal Processing" technology could help cut down on costs and improve reliability.

A5 4


Apple is also believed to be building a semiconductor R&D center in Israel. In late April, reports suggested Apple had initiated a "major hiring campaign" for the facility.
post #2 of 17
Quote:
Originally Posted by Hyram Gestan View Post
What is this thing?  It's not an iPad, so what is it?

 

A poorly-alpha'd image of an uncut processor board.

 

It's also stylized, as that's not what they look like, if I remember correctly.

Originally posted by Relic

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Originally posted by Relic

...those little naked weirdos are going to get me investigated.
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post #3 of 17
Quote:
Originally Posted by Hyram Gestan View Post


What is this thing?  It's not an iPad, so what is it?

It's a piece taken from the Bifrost..
post #4 of 17

Just brainstorming here, for shits'n giggles...: Intel's market cap is $130 billion at the moment, how long before Apple's cash reserve exceeds that, and what would happen if Apple would buy Intel?
 

42 = 54 base 13
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42 = 54 base 13
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post #5 of 17

Who's your daddy!

Author of The Fuel Injection Bible

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Author of The Fuel Injection Bible

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post #6 of 17
Quote:
Originally Posted by heinzel View Post

Just brainstorming here, for shits'n giggles...: Intel's market cap is $130 billion at the moment, how long before Apple's cash reserve exceeds that, and what would happen if Apple would buy Intel?

 

Apple stock would plunge if they did anything that dumb. Let the suppliers get paid peanuts while you sell the high margin final good! Don't buy the supplier!
post #7 of 17
Quote:
Originally Posted by cameronj View Post


Apple stock would plunge if they did anything that dumb. Let the suppliers get paid peanuts while you sell the high margin final good! Don't buy the supplier!

 

..not to mention it could never, ever happen as it would be an antitrust nightmare and would never be allowed. Apple would singlehandedly and instantly put everyone else out of business. 

post #8 of 17
Quote:
Originally Posted by cameronj View Post


Apple stock would plunge if they did anything that dumb. Let the suppliers get paid peanuts while you sell the high margin final good! Don't buy the supplier!

 

Quote:
Originally Posted by Slurpy View Post

 

..not to mention it could never, ever happen as it would be an antitrust nightmare and would never be allowed. Apple would singlehandedly and instantly put everyone else out of business. 


Good points. I was just thinking in terms of gaining a competitive manufacturing advantage over Samsung. But you're right, that would be a stoopid move.

42 = 54 base 13
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42 = 54 base 13
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post #9 of 17

I honestly think Apple would do better to make their own processors for their iDevices instead of having Samsung make the processors for them.

An Apple man since 1977
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An Apple man since 1977
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post #10 of 17
Maybe Apple could buy a stake in intel and invest some dough in an intel fab so that they make the new chips for them instead of further funding Samsung.
post #11 of 17

1.

Intel is going to miss out on a big opportunity to fab for Apple because of their "Not Invented Here" attitude towards ARM.

 

2.

Apple should fab its own stuff. SpaceX makes most of its own components for its own rockets in the USA. The USA should manufacture more things in the USA.

post #12 of 17
Quote:
Originally Posted by irnchriz View Post

Maybe Apple could buy a stake in intel and invest some dough in an intel fab so that they make the new chips for them instead of further funding Samsung.

 

That's a great idea, but it doesn't require any equity agreements. Intel just has to pull its head out of its behind and fab ARM initially, instead of trying to fight it.

 

Apple + Intel + ARM = best mobile/tablet chips in the world 2012--->2016. This is a no brainer. But ego, is everything, and is our biggest enemy.

 

Minnows grow but giants fall too.

post #13 of 17
Quote:
Originally Posted by heinzel View Post

Just brainstorming here, for shits'n giggles...: Intel's market cap is $130 billion at the moment, how long before Apple's cash reserve exceeds that, and what would happen if Apple would buy Intel?

 

Profitable companies are not sold for market cap valuations. Intel would cost an awful lot more than 130m.

Not that there's even the remotest chance of this actually happening for many other reasons.
post #14 of 17
Quote:
Originally Posted by jouster View Post

Profitable companies are not sold for market cap valuations. Intel would cost an awful lot more than 130m.
Not that there's even the remotest chance of this actually happening for many other reasons.

That's true, but it's also true that one doesn't need to have cash on hand for the entire purchase price.

Typically, when companies are sold, they sell for a modest premium over the share price. With Intel's market cap of $130 B, if they were sold, it would probably be in the range of $150-200 B. Apple could easily manage that between cash on hand and borrowing. Of course, I'm not suggesting that it would make sense, but it could be done pretty easily.

Quote:
Originally Posted by nvidia2008 View Post

That's a great idea, but it doesn't require any equity agreements. Intel just has to pull its head out of its behind and fab ARM initially, instead of trying to fight it.

Apple + Intel + ARM = best mobile/tablet chips in the world 2012--->2016. This is a no brainer. But ego, is everything, and is our biggest enemy.

Minnows grow but giants fall too.

And that's what happened to Dell because they lost sight of their business model.

Intel has a business model. Abandoning your business model simply to chase revenues is a really bad idea. Intel's business model is based on selling chips that have a proprietary component and obtaining a high premium. The margins they could obtain for ARM are much, much lower because of competition and lack of IP. Cannibalizing your own products with a proprietary, newer, high margin product makes sense. Cannibalizing your own products with a generic, low value product very often does not.

Now, if Intel had a plan for converting ARM chips into something Intel could control, that would be a different story. For example, what if they were able to hypothetically manufacture a core series chip with an ARM core for something like the MBA - which would allow it to run both OS X and iOS apps on the same system without recompiling? Or incorporating Intel's basic technologies (I'm sure they must have some specific technologies that could apply to ARM - perhaps some caching tools or execution sequence tools?) into an ARM chip to create a chip that is significantly better than other ARM chips out there - with enough of a differential to allow them to get a significant premium. If they could do that, then fabbing ARM might make some sense. It is not, however, quite so clear that simply acting as a foundry for Apple's chip designs is much of a win - especially when it looks like they're making good progress with making Atom into a real competitor.



This article is amazing. Apple is approaching 10% of all the semiconductor purchases in the country? That includes washing machines, cars (how many dozens of ICs are there in a car these days), industrial controllers, etc. And Apple has close to 10%. And they're approaching 30% of ALL electronics semiconductor purchases (TVs, stereos, etc, etc). The numbers are just mind-boggling.
"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 #15 of 17

Rumor has it that Apple is increasingly purchasing the equipment used by its suppliers (giving apple benefits in terms of rapid scaling, price, and preventing that equipment from being used by competitors).

 

It would be really interesting to know what fraction of the capital equipment in the semiconductor industry is owned directly by Apple, and to see how that evolves over time. We might not ever know for sure, because Apple might remain pretty coy about exactly what it owns. But it's conceivable that Apple might one day own more chip fab equipment than Intel. That would really be something. 

 

(I'm sure Apple will never own and operate entire fabs -- there's just no point to doing that when you own the designs and the equipment)

post #16 of 17
Quote:
Originally Posted by nvidia2008 View Post

 

That's a great idea, but it doesn't require any equity agreements. Intel just has to pull its head out of its behind and fab ARM initially, instead of trying to fight it.

 

Apple + Intel + ARM = best mobile/tablet chips in the world 2012--->2016. This is a no brainer. But ego, is everything, and is our biggest enemy.

 

Minnows grow but giants fall too.

 

i think it was a mistake for intel not to fab ARM chips and to generally ignore ARM chips, but I don't see why Apple + intel + ARM would be any kind of winning combination.  intel is nothing special in terms of being a chip fabricator.  

 

Fabrication and Design have been more or less completely separate per suits for a long time now.  intel has been beaten handily at design, and there are no magic tricks when it comes to fabrication that intel has that are otherwise unavailable to others.  Anyone can fab chips and Apple might even be investing in their own facilities from what I hear.  It's really the design that matters and Apple has come up with superior designs.  They also probably have more, (and better), chip design talent at Apple than at intel at the moment. 

post #17 of 17

They want to build a facility in Austin.

Why don't they just buy Freescale and move into their facility?

That way it satisfies both issues. Google already bought Motorola.

Apple should buy Freescale.

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