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Gartner Says Worldwide Semiconductor Spending Declined in 2019 Due to Slowing Macroeconomy and Falling Memory Prices



Apple Took the Top Rank Among Global Semiconductor Customers in 2019

Apple reclaimed the No. 1 position among global semiconductor chip buyers in 2019, representing 8.6% of the total worldwide market, according to Gartner, Inc. Samsung dropped to the second spot with 8% market share.

Leading original equipment manufacturers (OEMs) reduced their semiconductor spend in 2019, influenced by declining memory prices. Apple took the top rank from Samsung, driven by its success in wearable products, namely Apple Watch and AirPods. Huawei retained the third position, having performed well through 2019 despite the U.S.-China trade war.

“The members of the top five did not change in 2019, but all of them decreased chip spending through 2019,” said Masatsune Yamaji, senior principal analyst at Gartner. “The major reason was the sharp memory price decline. Memory prices were extremely high and a serious burden for many OEMs in 2018, representing 45% of their total chip spending. However, the situation improved in 2019. The top five OEMs reduced their memory spending share to 36% in 2019 while improving the computing performance of their products with better processors and greater memory content.”

Global uncertainty and the slowing macroeconomy had a significant impact on semiconductor buyers in 2019. Political friction including the U.S.-China trade war, Brexit, conflict between Japan and South Korea and protests in Hong Kong increased in 2019 and slowed growth in the global economy. “This macroeconomic environment cooled demand for a wide variety of electronic equipment. Total electronic equipment revenue decreased $4.7 billion in 2019, a 0.2% decline from 2018,” said Mr. Yamaji.

Apple reclaimed its position as the No. 1 global semiconductor customer in 2019, taking over from Samsung Electronics, which held the top rank for the past three years. Nine of the top 10 companies in 2018 remained in the top 10 in 2019, with Hon Hai replacing Kingston Technology (see Table 1). The top 10 OEMs decreased their share of chip spending to 39.5% in 2019, down from 39.9% in 2018.

Table 1. Preliminary Ranking of Top 10 Companies by Semiconductor Design TAM, Worldwide, (Millions of Dollars)
2018 Ranking 2019
Ranking
Company 2018 2019  2019 Market
Share (%)
Growth (%) 2018-2019
2 1 Apple 41,390 36,130 8.6 -12.7
1 2 Samsung Electronics 42,512 33,405 8.0 -21.4
3 3 Huawei 21,181 20,804 5.0 -1.8
4 4 Dell 19,131 16,257 3.9 -15.0
5 5 Lenovo 17,670 16,053 3.8 -9.2
6 6 BBK Electronics 13,871 12,654 3.0 -8.8
7 7 HP Inc. 11,460 10,428 2.5 -9.0
10 8 Xiaomi 6,921 7,016 1.7 1.4
9 9 Hewlett Packard Enterprise 7,281 6,215 1.5 -14.6
11 10 Hon Hai 6,583 6,116 1.5 -7.1
    Others 286,630 253,224 60.5 -11.7
    Total 474,631 418,302 100.0 -11.9
TAM = total available market
Source: Gartner (February 2020)

Apple decreased its semiconductor spending by 12.7% in 2019. However, Apple performed well in the wearable market with Apple Watch and AirPods and increased its spending through the adoption of a triple-camera module in a new iPhone model. “Memory price decline enabled Apple to add more value to the new iPhone models without a significant price increase,” said Mr. Yamaji.

Samsung Electronics dropped to the No. 2 position, decreasing its spending by 21.4% in 2019. “The result is not just a sharp memory decline but Samsung’s struggle in most of the target electronic equipment markets, especially in the smartphone and solid-state drive (SSD) markets,” said Mr. Yamaji.

Huawei remained in the No. 3 position despite the negative impact from the U.S.-China trade war. Huawei decreased its semiconductor spending by 1.8%, driven by its success in the smartphone market in 2019. Xiaomi ranked No. 8 in 2019. Among the top 10 companies, Xiaomi was the only OEM that increased its total semiconductor spending through 2019, representing 1.4% growth.

Gartner clients can get more information from Market Share Analysis: Top 10 Semiconductor Chip Buyers, Worldwide, 2019 (Preliminary).”

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