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Apple Passes HP as World's Largest Chip Buyer

Apple Inc. has surpassed Hewlett-Packard as the world's largest OEM buyer of semiconductors, according to researcher IHS iSuppli.

In 2010, Apple purchased $17.5 billion of semiconductors, a 79.6 percent increase from the $9.7 billion the company bought in 2009. The percentage increase was the highest rate of increase among the world's Top 10 OEM semiconductor buyers. It propelled Apple past HP as the world largest semiconductor purchaser. HP bought $15.2 billion of semiconductors in 2010 and is now the second-largest buyer. Samsung Electronics purchased $13.9 billion of semiconductors and is the third biggest chip buyer, according to IHS iSuppli.

"Apple's surge to leadership in semiconductor spending in 2010 was driven by the overwhelming success of its wireless products, namely the iPhone and the iPad," said Wenlie Ye, an analyst for IHS iSuppli. The products consume large amounts of NAND flash memory. In fact, Apple is the world's top purchaser of NAND flash, Ye added.

Apple is likely to remain as the top semiconductor buying OEM and will likely extend its lead over HP because of the growth in demand for its products, noted IHS iSuppli.

In 2011 Apple's semiconductor spending is expected to exceed that of Hewlett-Packard by $7.5 billion. Apple's semiconductor purchases will total $22.4 billion, while HP will buy $14.8 billion of chips in 2011, IHS iSuppli reported.

Although Apple and HP are rivals in the computer industry, they are buying chips for different types of products. Wireless devices constitute a larger portion of Apple's product line than do computers, as Apple spent approximately 61 percent of its semiconductor budget in 2010 for wireless products such as iPhones and iPads. In contrast, 82 percent of Hewlett-Packard's 2010 semiconductor spending was dedicated to computer products including desktops, notebooks, and servers.

Smart phone and tablet markets are outgrowing the computer segment in 2011. Smart phone shipments in 2010 rose 62 percent, while tablet growth skyrocketed by more than 900 percent, driven by the introduction of Apple's iPad. In contrast, global PC shipments grew a relatively weak 14.2 percent in 2010, according to IHS iSuppli.

Growing demand for Apple products directly resulted in an increased demand for semiconductors.