iPad and iPhone make Apple One of World's Largest Semiconductor Buyers

The phenomenal success of iPad and iPhone is expected to make Apple (News - Alert) Inc., the world’s second-largest semiconductor buyer in 2011, potentially positioning the company to become the world’s top chip purchaser in 2012, according to high-tech market research firm iSuppli Corp.

Apple, which is projected to spend an astonishing $16.2 billion on semiconductor in 2011, may leap over Samsung (News - Alert) Electronics Co. Ltd., whose spending in chips is likely to decrease to $13.9 billion.

 According to iSuppli Corp, Apple’s one-step rise in the rankings will move the company to a close second place behind Hewlett-Packard (News - Alert) Co., which will retain its No. 1 ranking next year thanks to $17.1 billion in spending.

“Leadership in semiconductor spending represents a position of prestige,” said Min-Sun Moon, senior analyst for semiconductor spend and design at iSuppli. “An advancement in the rankings means that a company has been successful in introducing new products and that it is allocating more dollars in research and development—two factors that, incidentally, feed innovativeness as well.”

In Apple’s case, she said, the move to second place reflects the company’s triumph in the iPhone (News - Alert) 4 and iPad, two flagship products that have captured the public’s imagination—and have garnered tremendous sales—on a scale unequaled by rival devices.

“Apple’s expected rise to No. 2—eclipsing Samsung and putting it within a hair’s breadth of Hewlett-Packard—means that the company’s investment in its new smartphone and tablet has paid off—and will do so for some time to come,” Moon noted.

Apple’s anticipated growth in 2011 continues the extraordinary expansion enjoyed by the company in recent times. In 2009, Apple recorded a surprising 13 percent increase in semiconductor spending—a year when most manufacturers posted negative growth. This year, spending by Apple is likely to rise by a staggering 54.0 percent to reach $12.4 billion— the highest growth rate predicted for any company. Next year, spending levels will augment by another 30.4 percent for the company to catapult to its vaunted second-place finish.

Barring any unforeseen mergers and acquisitions by current champion Hewlett-Packard, Moon summarized, Apple could well snag the top spot as soon as 2012, ousting a company that has held down the pinnacle since early this millennium.

iSuppli says the date it collected indicates that a number of OEM companies are set to join Apple and post rapid growth in semiconductor spending levels in the current year.

Overall, semiconductor consumption is predicted to increase in the Asia-Pacific region, given the rise of manufacturing levels in the region and because of outsourcing activity flowing out from other areas. Major markets contributing to this trend include computing platforms, wireless communications and wired communications.