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.
"The company couldn't have achieved these positions only by being a follower. It is an innovator too."
@Bolaji: I agree. Most people think innovation is all about new products which is not necessarily the case. Innovation can also be in terms of producing the existing products at a cheaper cost which is primarily what Samsung has done. Yes, it wasn't the first one to come up with touch-based devices but it was able to product touch-based smartphones and tablets at lower costs through innovation which is why they became a success.
I recently read that the number of Android devices in the world will surpass the number of devices on iOS platform. That's another worry for Apple as it now has much stronger competition on the software side as well while competing on the hardware side with Samsung and others.
@Kayode, Samsung snatched the market leadership crown from Apple in Smartphones sales - that is no joke. It shows how hard the company is hacking away at Apple. It launched its attack, where Apple is most vulnerable - that is the smartphones market and used it to their advantage .More so; it's been able to deliver smartphones of various shapes and sizes with features to match that of iPhones. I'm sure Samsung cannot let down its guard at this moment. I hope not.
I agree Pocharle. Samsung is certainly a market leader in innovation. Samsung's latest version of its Galaxy S range is regarded comparable in design and other features too.
@_hm, the company have done pretty well to have come this far. It's currently the market leader in smartphones, where they have hit a 76% record high in just the sales of smartphones alone. The company owns manufacturing facilities, where their products are built. Apple may have the capability to design its own devices and some other software it uses, but rely on Samsung and some other electronic technological companies to build its devices. I think Samsung's achievement cannot be regarded lightly. This is a company turning things around and certainly still going strong.
Yes, Samsung is a good follower but it's also one that has become a leader. It is No. 1 in smartphones and mobile phones, No. 1 in DRAM (memory semiconductor) and a leader in TVs plus other consumer electronics products. The company couldn't have achieved these positions only by being a follower. It is an innovator too.
The new government rules and regulations may prove to be a double-edged sword: achieving some positive goals but costing organizations a great amount of money and work and, perhaps, lost sales as well.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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