Apple, top semiconductor customer for 2011

Design TAM represents the total silicon content in all products designed by a certain electronic equipment manufacturer or in a certain region, while purchasing TAM represents the total silicon content purchased directly by a certain electronic equipment manufacturer or in a certain region. According to Gartner, design TAM is a useful index for semiconductor vendors when they are considering how to allocate their sales or field application engineer resources by customer or region. Purchasing TAM, the analyst adds, is a useful index for semiconductor vendors when they are considering how to establish an efficient distribution network by customer or region. Masatsune Yamaji, principal research analyst at Gartner, said: "The major growth drivers in 2011 were smartphones, media tablets and solid state drives. Those companies that gained share in the smartphone market, such as Apple, Samsung Electronics and HTC, increased their semiconductor demand, while those who lost market share in this segment, such as Nokia and LG Electronics, decreased their semiconductor demand. Media tablets were also a growth driver for the semiconductor market throughout 2011." Given the rapidly changing competitive structure of the IT and electronics industry, Yamaji warned that no semiconductor device vendor can afford to just monitor the requirements of the current market leaders. "Vendors need to be constantly looking for new market entrants who will, in turn, be tomorrow's market leaders," he said. Within Gartner's top 10 rankings, three companies were from the Americas, three from Asia/Pacific, three from Japan and one from EMEA. Apple led the market in 2011, achieving significant growth, as it has done for the past five years. As a result, it became the biggest customer of semiconductor chip vendors in 2011, climbing two places in the ranking, from third in 2010. Apple gained a much greater share of the smartphone market, and its media tablet business was also highly successful in 2011. While DRAM prices fell drastically in 2011, and many pc vendors decreased their total semiconductor demand accordingly, the success of the MacBook Air enabled Apple to increase semiconductor chip demand even in its pc business. Yamaji noted that, as more brand name companies increase their production outsourcing to ODMs EMS providers, semiconductor procurement by both providers has increased year over year. Currently, three of the top 10 purchasing TAM companies are so called contract manufacturers. "Semiconductor chip vendors must pay attention not just to the design TAM and purchasing TAM by company, but also by region," concluded Yamaji. "This is the key to avoiding inappropriate sales resource allocation. They must keep an eye on design win opportunities in the US, while also establishing a strong distribution network in China." Source: Gartner (January 2012)