Samsung Snatches Another Apple Crown

Are there Apple Inc. (Nasdaq: AAPL) turfs that Samsung Electronics Co. Ltd. (Korea: SEC) doesn't want to stomp on? The Korean electronics giant in 2012 grabbed the title of the No. 1 consumer of semiconductors from its North American smartphone and tablet PC competitor, according to an announcement yesterday by Gartner Inc., adding to its bragging rights as the world's biggest seller of smartphones.

Gartner said Samsung was the world's biggest "semiconductor customer" in 2012 with a 28.9 percent jump in its chip demand to $23.9 billion compared with $18.6 billion in the preceding year. During the same period, Apple slid to the No. 2 position with a still respectable 13.6 percent jump in semiconductor usage to $21.4 billion from $18.8 billion in the prior 12-month period. The other companies making up the top five positions are HP at No. 3, Dell at No. 4, and Sony at No. 5. Lenovo, Toshiba, LG Electronics, Cisco, and Nokia were also on the top 10 list of semiconductor users in 2012, according to Gartner.

Samsung's rise to the top position as the world's biggest buyer of semiconductors was not a surprise. It posted strong smartphone sales in 2012, helping it eclipse Apple as the world's leading seller of the device. Additionally, it continues to ship traditional phones at a healthy clip and while it has been less successful in the tablet PC segment, it has also seen its market share there rise strongly. Based on current projections, the company is likely to widen the gap between it and other OEMs this year and over the next several years.

The PC market was still the top destination for semiconductors in 2012 and that may not change this year, according to Gartner. One reason for this is that the amount of semiconductors used in smartphones and tablet PCs is typically lower than for regular PCs. Partly as a result, total semiconductor shipment fell in 2012 to $297.6 billion, a 3 percent decline from $306.8 billion in 2011, the research firm said.

Masatsune Yamaji, principal analyst at Gartner, indicated in the above statement:

In addition to a weak macroeconomic situation, a dramatic change in consumer demand contributed to a reduction in semiconductor demand in 2012. The PC market still represented the largest sector for chip demand, but desktop and mobile PCs did not sell well, as consumers' interest shifted to new mobile computing devices like smartphones and media tablets. This shift caused a substantial decrease in semiconductor demand in 2012, as the semiconductor content of a smartphone or a media tablet is far less than that of a PC.

Yamaji said other segments of the electronic equipment market stepped in with higher semiconductor consumption in 2012, led by the datacenter and communications infrastructure sectors. Even so, the companies that many leading chip vendors will focus upon more in the future for sales would continue to be Apple and Samsung, which together now account for more than 15 percent of total industry semiconductor usage.

Apple doesn't own its own semiconductor operation but Samsung does, which meant that in 2012, it purchased some or even the largest chunk of its chip requirements from itself. Samsung was also a supplier to Apple, which is trying to cut down on chip purchases from the Korean company as their rivalry intensifies. For now, though, Samsung seems to be hitting all the sweet spots in the market.