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Wireless Segment to Purchase the Most Chips in 2011

The wireless segment in 2011 will become the leading application market for semiconductor purchasing by original equipment manufacturers, according to researcher IHS iSuppli.

As smart phone and media tablet sales continue to soar, OEMs in 2011 will buy $55.4 billion worth of semiconductors for use in wireless devices, up 10.7 percent from $50.1 billion in 2010, reported IHS iSuppli. OEMs will spend $53.1 billion on semiconductors for use in computers, up just 1.2 percent from $52.5 billion in 2010.

Wireless will increase its lead over computers, in terms of semiconductor spending in 2012, as more mobile devices ship.

Booming demand for smart phones and media tablets-- such as Apple’s iPad and iPhone-- is driving chip sales used in wireless equipment, said Wenlie Ye, analyst for semiconductor design and spending at IHS iSuppli.

“With overall sales growth for PCs slowing, the balance of power in the semiconductor industry is shifting toward the wireless segment,” said Ye.

The wireless semiconductor spending segment consists of OEM chip purchases for mobile devices such as mobile handsets, smart phones, and media tablets. The category also includes wireless infrastructure gear including routers and base stations.

The computer segment is comprised of spending on chips used in computers, including notebook PCs, desktop PCs, and servers. The category excludes chip spending for computer peripherals such as hard disk drives and printers.

The shift in market focus toward mobile platforms, and the limited growth potential of the computer market, suggests that wireless will remain the top OEM semiconductor segment years. However, computer applications will remain a major segment for OEM semiconductor purchasing. While tablets are cannibalizing the computer space, notebook sales are still expanding.

Due in part to healthy notebook demand, computer-related semiconductor purchasing will not decline significantly.

OEM semiconductor spending trends also reflects the success of Apple’s products. Last year, Apple became the world’s largest OEM semiconductor buyer for the first time, surpassing Hewlett-Packard. Apple is set to increase its lead in semiconductor purchasing over HP in 2011 and 2012.