The world's top electronic brands are set to spend $265.2 billion this year on a wide range of semiconductors for devices like smartphones and tablets, with increasingly contentious rivals Samsung Electronics and Apple Inc. again in a tussle to claim the title of biggest spender, according to a Semiconductor Spend Analysis market tracker report from information and analytics provider IHS.
The total available market, or TAM, on semiconductors by original equipment manufacturers (OEM) in 2013 will be up 4.2 percent from $254.4 billion in 2012, given the level of chip spending by OEMs with annual revenue of $1 billion or more.
This year's TAM in OEM chip spending will represent a welcome increase after a flat 2012. The level by year-end will be at its highest in six years, with expenditures in 2014 forecast to make another modest jump to $279.4 billion.
While the TAM figure is instructive because it shows the overall extent of chip spending among the top brands, expenditures are also tracked in another way that is perhaps more indicative of the true spending size of individual players.
If internal chip consumption within companies is excluded-as in the case of companies like Samsung, which also provides semiconductors to its internal divisions besides selling to external customers-the served available market, or SAM, for 2013 will equate to a slightly lower $241.3 billion. Extending this principle, companies or expenditure segments tracked by their SAM levels yield a more accurate picture of their net spend, which does not include internally sourced products that could be classified as intersegment sales.
Depending on the metric used, either Samsung or Apple will be the top chip spender this year. Samsung is No. 1 in terms of TAM chip spending, but Apple is the leader if expenditures are reckoned via SAM. Either way, the honor does not merely signify bragging rights but also carries attendant overtones of prestige and influence, with the occupier often tacitly acknowledged by all others as the industry's top semiconductor spender.
Other OEMs that make an appearance in both TAM and SAM lists-rankings vary depending on the roster-include Hewlett-Packard, Lenovo, Sony, Dell, Cisco Systems, Panasonic, Toshiba and Asustek Computer.
Wireless is king, but computer platforms still matter
Not surprisingly, the greatest share of spending this year will be in wireless communications where Samsung and Apple lord over other players. Wireless alone is forecast to gobble up 26 percent-approximately $62 billion-of total top OEM semiconductor SAM. Wireless is also expected to be the highest-growth market in 2013 after an annual projected expansion of 12.8 percent.
Within the wireless segment, handsets continue to be the largest market, with OEM chip spending in 2013 expected to reach $46.7 billion. Media tablets are next at $8.2 billion, exceeding wireless infrastructure for the first time after the latter falls this year to $7.1 billion.
After wireless, computer platforms representing PCs and similar computing devices collectively represent the next-largest segment, forecast to take up 23 percent of OEM chip spending. China, which became the world's biggest market for PC shipments last year, continues to account for a hefty part of PC-related chip spending even as the overall global computer market has slowed.
Following wireless and computer platform are the other smaller markets that take up the rest of OEM chip spending. In decreasing size, these segments are consumer, computer peripherals, automotive, industrial and wired communications, with share portions for each ranging from 6 to 15 percent.
Among semiconductor components, OEM chip spending this year will be largest in logic integrated circuits (IC) at nearly $75 billion, followed by memory ICs at $44 billion. The rest of the categories being tracked include analog ICs, discrete chips, microcomponent ICs, optical semiconductors, and sensors and actuators.