HP, Apple, Samsung largest chip consumers in 2010

Semiconductor device vendors must pay attention not just to the design and purchasing TAM by company, but also to that by region, Garter says.

Suzanne Deffree, Managing Editor, news -- EDN, January 31, 2011

The top 10 OEMs accounted for $104.3 billion of semiconductors on a design total available market (TAM) basis, or 34.7% of vendors' worldwide chip revenue, in 2010, according to Gartner Inc.

The figure is about $26.3 billion more than 2009’s figure, up 33.7% year on year. Eight of the top 10 companies in 2009 remained in the top 10 in 2010. (See table below)

Gartner reported that the major growth drivers in 2010 were mobile PCs, smartphones, and LCD TVs. Gartner made special note of Apple, which plays heavily in mobile computing and smartphones, as “leading the new competitive landscape of the IT and electronics industry.”

The research company described Apple as a “new-style vertically integrated company” that provides hardware, software, and services for PCs, smartphones, portable media players, and media tablets with production outsourced. Gartner reported that while Apple’s TV business is currently small, it is continuing to invest in the TV market by shipping new Internet Protocol set-top boxes. Google also intends to expand its platform business to the TV market, and Gartner believes that the TV service platform market is a key growth segment in the coming years.

"Semiconductor device vendors should closely monitor the changing competition structure of the target market," said Masatsune Yamaji, senior research analyst at Gartner, in a statement. "Do not just listen to the requirements of the current market leaders. Have a dedicated sales team, with business development sales metrics, looking for new market entrants who will be the next-generation market leaders."

On a purchasing TAM basis, four of the top 10 companies are contract manufacturers. As more brand companies are increasing their production outsourcing to ODMs and EMS providers, their semiconductor procurement has increased year by year, Garter said.

"Judging from purchasing TAM, Asia/Pacific, and especially China, offers the greatest opportunities in most of the device and application market segments," Yamaji said. "It will be difficult for most of the semiconductor device vendors, especially replaceable general-purpose device vendors, to achieve the full design-win benefit without establishing a strong distribution network in Asia/Pacific."

"Semiconductor device vendors must pay attention not just to the design and purchasing TAM by company, but also to that by region. This is the key to avoiding inappropriate sales resource allocation," Yamaji said. "Semiconductor device vendors must keep an eye on the design-win opportunity in the US, while they must establish a strong distribution network in China."