Apple spends a whopping $28 billion a year buying semiconductors for the millions of tablets, phones and computers it produces, according to estimates released from IHS iSuppli, a research firm. That makes Apple far and away the largest buyer of silicon, ahead of No. 2 Samsung, which buys $14.9 billion.
It’s a huge number, more than the total number of chips sold in a given month, but to really drive it home, I pulled the estimates from the Semiconductor Industry Association and the World Semiconductor Trade Statistics (WSTS) Spring 2012 global semiconductor sales forecast, which projects that worldwide sales will hit $301 billion this year. Thus, Apple is expected to buy 9.3 percent of the chips sold throughout the world this year.
That’s a lot of phones and tablets. It’s also more than a May estimate by IHS iSuppli that predicted Apple would spend $27 billion. But rising sales of devices are not the only reason Apple purchases so much silicon. It also has to do with how it has designed its devices, using separate application processors, which are the brains of the phone, and radios. Qualcomm offers an integrated processor in many top phones, which combines multiple chips on one system on a chip. Still Apple’s success in consumer goods and the growing number of chips inside those goods are driving this trend.
And its success selling to consumers means it is amassing more buying power among chip vendors, and an edge against its rivals. From the release announcing the report:
“It’s well known that Apple has already conquered the smartphone and tablet segments—but behind the scenes the company is engaging in another kind of conquest: the dominance of the electronics supply chain,” said Myson Robles-Bruce, senior analyst for semiconductor spending and design activity at IHS. “Such a dominant position provides critical benefits, allowing one to dictate semiconductor pricing, control product roadmaps and obtain guaranteed supply and delivery. For Apple, these benefits translate into competitive advantages, letting it offer more advanced products at lower prices, faster and more reliably than the competition.”
Apple is set to expand its lead in global chip purchasing next year, with growth of 12.3 percent once again leading the Top 10 OEM semiconductor purchasers. Meanwhile, the SIA and WSTS believe global semiconductor sales will grow 7.2 percent next year ($322 billion in total sales). So Apple will continue to grow at the expense of others.