Apple will spend $28 billion on semiconductors for all its gadgets this year, according to estimates by IHS iSuppli. With Apple producing millions of tablets, phones and computers, that's a lot of components.
Apple now buys the most silicon by far, almost twice as much as Samsung who is the second largest buyer (at $14.9 billion) The two companies were almost neck and neck until 2011, when Apple shot ahead.
Apple’s high demand for semiconductors is down to its use of multiple microchips in each iPod, iPad and iPhone, and now the MacBook Air, and MacBook Pro with Retina Display, notes Gigaom. The company also uses integrated processors provided by Qualcomm, which combine multiple chips on one system on a chip.
This high demand for semiconductors has enabled Apple to get a monopoly on supply giving it a competitive advantage. IHS senior analyst Myson Robles-Bruce said: “Behind the scenes the company is engaging in another kind of conquest: the dominance of the electronics supply chain. Such a dominant position provides critical benefits, allowing one to dictate semiconductor pricing, control product roadmaps and obtain guaranteed supply and delivery.”
These benefits allow Apple to offer more advanced products at competitive prices and create the products faster and more reliably.
IHS iSuppli believes that worldwide, sales of semiconductors will hit $301 billion this year, based on its estimates and projections. Based on this research, Apple is expected to buy 9.3% of semiconductors sold in the world this year.
Semiconductors are found at the heart of microprocessor chips. Semiconductor chips and transistors are usually created with silicon.
Apple has always had a high demand for microchips, in 2010, Apple surpassed HP and all other equipment manufacturers to become the world's highest buyer of silicon, spending $17.5 billion, compared to $9.7 billion in 2009.
Flash memory is another area where Apple has a bit of a monopoly. Apple's iPad accounted for 78% of global NAND shipments in 2011, that was down from 92% in 2010, when it had the market largely to itself for most of the year. Even back in 2007 the company was attempting to secure Samsung as a source to purchase up to 500 million flash memory chips for the iPhone, for only seven months worth of production. Of course, now the two companies are at loggerheads, and Apple has sought new chip suppliers. According to IHS iSuppli, it is safe to say that Apple will push global demand for flash memory through to 2015.