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Apple to spend big on semiconductors in 2011

HP's decade-long dominance as the leading spender on semiconductors is under threat with Apple overtaking Samsung in iSuppli's annual spending forecast.

Semiconductor

Analyst iSuppli predicts Apple will become the world's second largest semiconductor buyer in 2011, surpassing Samsung and leaving only HP as spending more.

Citing "tremendous sales" of the iPhone 4 and iPad, the market research firm forecasts Apple will spend $16.2 billion next year on semiconductors, comfortably overtaking Samsung's $13.9 billion and only narrowly behind HP's predicted $17.1 billion.

"An advancement in the rankings means that a company has been successful in introducing new products," iSuppli senior analyst Min-Sun Moon said in a statement.

"The move to second place reflects the company's triumph in the iPhone 4 and iPad, two flagship products that have captured the public's imagination and have garnered tremendous sales on a scale unequalled by rival devices," she added.

Aside from being good news for Apple, the company's surge in spending fuelled by the success of its iOS 4-based products also provides proof of a wider shift in the semiconductor market towards low-power chips designed for use on mobile devices.

Both the iPhone 4 and iPad use the ARM-based Apple A4 chip, as do a growing number of high-end smartphones.

"This is a an indication of where the technology is moving," Moon told US site CNET. "Apple is contributing to the trend of moving away from Microsoft-Intel to ARM-based systems."

Moon also predicts that "barring any unforeseen mergers and acquisitions by current champion HP, Apple could well snag the top spot as soon as 2012, ousting a company that has held down the pinnacle since early this millennium".

While Samsung dropped to third place in iSuppli's forecast, its spending levels are nonetheless still expected to rise modestly in 2011, as are HP's and fourth placed Dell's.

Responding to the huge demand for the iPad and iPhone 4, meanwhile, Apple has insisted it hasn't engineered stock shortages to crank up anticipation and desire for its products, and says it is genuinely "stunned" by just how positively its latest devices have been received.

Speaking to analysts and reporters after announcing the company's latest set of stellar quarterly financial results, Apple's chief operating officer (COO) Tim Cook said "we do not purposely create a shortage for buzz."

"Currently we are still selling both [the iPad and iPhone 4] as fast as we can make them. We still are quoting longer lead times than we like, and we're working around the clock to try to get supply/demand in balance."

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