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Eating the crumbs left on the top table?

Just as the top 10 semiconductor companies account for 41.6% of global revenues, so the top 10 OEMs purchase 40.1% of the devices produced, according to market watcher Gartner. It’s a tidy balance, by the look of things.

And, in an even nicer piece of symmetry, Samsung not only generates the most revenue as a semiconductor vendor – $61.2billion and a 14.6% market share, in case you’re interested – it’s also the largest purchaser of semiconductors. Last year, it bought devices worth $43.1bn, or 10.3% of global spend.

Apple holds the number two slot, with a spend of $38.8bn, but is comfortably ahead of third ranked Dell, which ‘only’ purchased $15.7bn worth of parts. Samsung increased its spend by 37.2% from 2016, while Apple grew its spend by 27.5%.

Interestingly, a decade ago, the top 10 OEMs accounted for 31% of semiconductor consumption. That’s now 41.6% and Gartner expects this to exceed 45% in 2021.

What implications are there for other companies? It’s something which Gartner has considered. Principal research analyst Masatsune Yamaji said Samsung and Apple – which have held the top two positions since 2011 – continue to exert significant influence on technology and price trends for the whole semiconductor industry.

But that’s not all. “With the top 10 semiconductor chip buyers commanding an increasing share of the market, technology product marketing leaders at chip vendors … will need to prioritise direct sales and technical support resources to these top customers.”

And, as more resources are focused on a smaller number of companies, the distribution sector will need to broaden its support operations.

But Gartner raises another interesting point – with the large OEMs now developing their own silicon solutions, the increase in captive chip spending is a ‘great risk’ for the future growth of commercial chip vendors.

While it appears Samsung can have its cake and eat it, there may only be crumbs in the future for a wide range of chip developers.

Graham Pitcher

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