Top OEMs Accounted One-Third of Semiconductor Vendors' Worldwide Chip Revenue in 2009
Worldwide semiconductor device revenue reached $226 billion in 2009, down 11.4 percent from 2008, according to preliminary estimates by Gartner, Inc. Even in severe market conditions, leading-brand electronic equipment and design manufacturers remained at the center of the semiconductor world, accounting for $77.3 billion of semiconductors on a design total available market (TAM)* basis in 2009.
"The supply chains of the electronics industry have become more complicated, and, thus, the importance of original design manufacturer (ODM) businesses has risen," said Masatsune Yamaji, senior research analyst at Gartner. "As such, the top 10 branded OEM/ODM companies accounted for a third of all semiconductor demand in 2009, as they did in 2008."
HP remained the leading OEM worldwide for semiconductor consumption in 2009. It succeeded in gaining market share in all the PC market segments such as desktop PCs, mobile PCs and mini-notebook PCs. HP also maintained a strong position in printer, server and storage markets, though the total market size of servers and storage shrunk sharply in 2009. Samsung accounted for the second-largest demand for semiconductors in 2009 and is the most successful vertically integrated manufacturer, while Nokia ranked third, after losing business worldwide, especially in the U.S.
Apple and Acer were the only electronic equipment manufacturers among the top 10 companies to increase their semiconductor demand in 2009. Apple grew against the background of the demand trend shifting from hardware-oriented to service-oriented markets to become one of the most successful market players and one of the most attractive customers for chip vendors in PC, mobile handset and consumer markets, in terms of growth potential.
Acer succeeded not just in increasing its shipments of mini-notebook PCs, but also in gaining market share in the desktop PC and mobile PC markets. Gartner analysts said consumer demand is shifting from high performance to portability and affordability, and this trend accelerated Acer's growth in 2009. As a result, Acer increased its semiconductor demand and was ranked ninth in 2009, up from 11th in 2008.
"Overall, results are better than could have been predicted a year ago," said Mr. Yamaji. "Electronic equipment manufacturers made huge efforts to adjust their production and inventory in the first half of 2009 in order to deal with the economic downturn that set in at the end of 2008. Semiconductor demand has been gradually recovering since the second half of 2009, when the inventory adjustment was almost completed, but the pace of recovery differs by market segment."
Gartner's preliminary results reveal that semiconductor demand for PCs has shown a firm recovery, as mini-notebook PCs have sold well not just in emerging countries, but also in developed countries. DRAM pricing also stabilized in the latter half of 2009, and the new operating system (OS), Windows 7, also drove market demand. However, semiconductor demand for mobile handsets saw large declines, especially for enhanced phones, while the demand for smartphones grew. The semiconductor demand for smartphones, which had accounted for 19.8 percent of the demand for total mobile handsets in 2008, grew to 28.6 percent in 2009.
"Though the importance of ODM business has been increasing for the past 10 years, the leading brand companies are still the most important customers for semiconductor device vendors," Mr. Yamaji said. "Semiconductor vendors should pay much more attention to the leading electronic equipment manufacturers and their customers, who are catching up with the market trends and who will survive in the future."
Additional information is available in the report "Dataquest Insight: Top 10 OEM/ODM Semiconductor Demand, Worldwide, 2009 (Preliminary)." The report is available on the Gartner website at http://www.gartner.com/resId=1283621.
*Note to Editors on TAM
Gartner publishes preliminary reports on OEM semiconductor consumption every year. In past reports, the numbers we discussed were based on brand TAM. This year we have decided to look at the numbers on a design TAM basis, as semiconductor device selections are now done not just by brand companies, but also non-brand companies. This revision is more suited to the current electronics industry, as design TAM analysis helps companies allocate commercial and design sales resources.
Semiconductor demand, or the term "design TAM," refers to the total silicon content in all products designed by electronic equipment manufacturers. A design may be for the electronic equipment manufacturer itself or for one or more third party. The electronic equipment manufacturer may be a pure design firm or an ODM, or it may be an OEM offering design and manufacturing services.
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