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Semiconductor OEMs Predicted to Spend 13% More in 2010

Thu, 03/18/2010 - 8:52am
El Segundo, Calif., -- Semiconductor spending in 2010 among Original Equipment Manufacturers (OEM) and Electronic Manufacturing Service (EMS) providers will post double-digit increases, reversing the curtailment in spending from the two groups in the wake of the economic recession last year, according to iSuppli Corp.

Among electronic equipment OEMs, spending in 2010 will rise to $177.9 billion, up 13 percent from $157.0 billion in 2009. iSuppli forecasts that the total spend by EMS providers in 2010 will amount to $37.7 billion, up 15.1 percent from $32.8 billion in 2009.

The rise in spending among OEMs assumes the inclusion of all chips consumed by end products regardless of how the chips are purchased — including OEM direct purchases as well as procurement conducted through EMS or distributors.

  “The increase in OEM semiconductor spending in 2010 represents a turnaround for the market from 2009,” said Min-Sun Moon, senior analyst for semiconductor spend and design at iSuppli. “Spending last year plunged by 16.1 percent — due not only to a decline in the average selling price of chips but also because of a drop in shipments. Although still cautious, electronic OEMs this year are gearing up to gain more share in their respective markets — a strategy that will translate into greater semiconductor spending.”

  Hewlett-Packard is projected to be the top OEM semiconductor spender in 2010, a position it will retain after taking the No.-1 spot away from Nokia, which fell to third place in 2009. HP will spend an estimated $12.6 billion this year, compared to $10.99 billion in 2009.

In second place among top OEM spenders for 2010 will be Samsung Electronics, expected to spend $12.5 billion, compared to $10.3 billion last year. Notwithstanding its runner-up ranking for two consecutive years, Samsung is projected to take over the No.-1 title in 2011, thanks to its broad range of businesses — including new wireless handsets, thin LED-backlit TVs and 3-D TVs — that will drive increased semiconductor spending for the company.

Following Nokia in third place, Apple will become the fourth largest spender in 2010, moving past Dell. Though not even appearing in the ranks of the Top-10 semiconductor purchasers before 2006, Apple started advancing after introducing the iPhone in 2007 and is expected to surpass Nokia to land at No. 3 in 2011.

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