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Top ten semiconductor buyers upped spending by 25% in 2021

Ongoing shortage and COVID-19 pandemic fuelled hike in chip costs, Gartner finds

The top ten semiconductor buyers increased their chip spending by 25.2% in 2021 amid an ongoing semiconductor shortage, Gartner has revealed.

The chip shortage prevented original equipment manufacturers (OEMs) from increasing production of a broad range of products, such as vehicles, smartphones, games consoles, and various other electronic devices.

However, the shortage also significantly increased chip selling prices, resulting in buyers spending considerably more on acquiring chips than in previous years.

“Semiconductor vendors shipped more chips in 2021, but the OEMs’ demand was far stronger than the vendors’ production capacity,” commented Gartner research director Masatsune Yamaji.

The research firm found average selling prices of semiconductors increased by more than 15% or more in 2021 – which included microcontroller units, general purpose logic integrated circuits (ICs), and a wide range of application-specific chips.

“The semiconductor shortage also accelerated OEMs’ double booking and panic buying, causing a huge spike in their semiconductor spending,” Yamaji added.

According to Gartner’s latest preliminary data, the top 10 OEMs’ spending accounted for 42.1% of the total market.

In terms of individual manufacturers, Apple and Samsung occupy first and second place in the semiconductor spending top ten, with market shares of 11.7% and 7.8% respectively.

Apple increased spending on memory by 36.8% and on nonmemory chips by 20.2%, Gartner revealed, but the Cupertino giant decreased its demand for MPUs due to the shift to its own in-house-designed application processors.

Similarly, Samsung upped its memory spending by 34.1% and nonmemory chip spending by 23.9% as a result of both memory price and the Korean giant’s growth in its target markets such as smartphone and solid-state drive (SSD) markets.

Elsewhere, Huawei fell from third biggest spender in 2020 to seventh in 2021 after struggling to buy chips. By contrast, other Chinese smartphone manufacturers such as BBK Electronics and Xiaomi significantly increased their spending, Gartner found.

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