OEMs power semiconductor growth

A third of all semiconductor consumption in 2007 is by the top 10 original equipment manufacturer (OEM) firms, accounting for US$91 billion of the semiconductor market.

According to preliminary results from Gartner Inc, the number one consumer of semiconductors (and leading consumer of microprocessors and memory semiconductors) was Hewlett Packard (HP), which booked an 8% increase from 2006. The business generated $15 billion in 2007, compared with $14 billion in the year before.

The report also said that innovative uses of technology and an understanding of consumer requirements can lead to semiconductor consumption growth that exceeds 30% as shown by vendors at ninth and 15th place, Apple and Nintendo respectively. Driven by Apple computers, iPhones, iPods, Nintendo Wii and DS, Apple accounted for $5.9 billion (32% growth) in semiconductor brand-based total available market (BTAM) while Nintendo spent $3.6 billion (127% growth).

"Their integration of sensors and focus on industrial design and the 'user experience' set an example that few OEMs will find easy to emulate," Alfonso Velosa, research director at Gartner said. "Doing so will require several things: expertise in software; a focus on ease of use and the user experience; relationships with major content developers; and an understanding of the overall electronics 'ecosystem.'"

The semiconductor consumption threshold in the top 10 grew to $5.9 billion, ($1 billion more than in 2006) due to the strong revenue and unit shipment growth of the leading OEMs in 2007. However, there was significant average-selling- price (ASP) erosion, especially in the key PC and mobile-handset markets, which limited the growth of these firms' semiconductor consumption.