Apple, Samsung, and Huawei ranked as the world’s top semiconductor buyers in 2020, reports global research group Gartner. The trio’s combined $109.1 billion in chip spending helped the market grow to $449.8 billion, up 7.3 percent year-over-year.
Nevertheless, the electronic components sector underwent significant upheaval last year because of COVID-19 and changes to U.S. trade policy.
While those developments prompted some vendors to increase their capital expenditures, another drastically reduced their outlays.
Apple Tops the Rankings
Last year, Apple spent $53.6 billion purchasing electronic components, meaning it snapped up 11 percent of the chips available on the market.
Though the iPhone manufacturer ranked as last year’s top semiconductor customer, it increased its spending by 24 percent from 2019. It increased spending due to a few different factors, most prominently, to capitalize on public interest in its flagship smartphone. According to Counterpoint Research, its Q4 mobile device sales increased by 21 percent from the same period last year.
Apple’s material costs also jumped because its newest iPhones feature 5G-compatible parts. JP Morgan Chase estimated fifth-generation networking components are twice as expensive as previous generation hardware.
Finally, Apple launched its first line of self-designed computer system-on-a-chip (SoC) in 2020. The company refreshed its MacBook Air, MacBook Pro, and Mac-Mini lines with 5nm M1 processors that wowed consumers with their high performance and low power consumption. It paid foundry partner Taiwan Semiconductor Manufacturing Company (TSMC) vast sums of money to fabricate its new cutting-edge SoCs.
Finally, the Big Tech corporation ramped up its semiconductor expenditures to meet coronavirus pandemic-related demand for its computing products. Gartner noted homebound consumers purchased new laptops and tablets to work and learn from home, including a record number of Macs.
Since Apple will refresh its computing, handset, and wearables products this year, it will likely rank as 2021’s biggest chip buyer.
Samsung’s Chip Spending Up 20 Percent
Samsung dedicated $36.4 billion to purchase semiconductors in 2020, up 20.4 percent year-over-year.
Like Apple, Samsung’s high chip expenditures last year came about in large part because of COVID-19. Gartner notes the conglomerate increased its spending to produce lots of SSDs to enable data center providers to cope with an unprecedented spike in online services usage. It also ramped up its memory module output to address pandemic-related PC demand.
In addition, Samsung paid a lot of money to Qualcomm to use its 5G mobile platforms in its S21 flagship smartphones. The firm’s 2021 expenditures will probably remain consistent with last year as it intends to launch new handsets (low and midrange) and a new generation of foldable devices.
That said, the company’s semiconductor business brought in $16.4 billion in revenue in Q4 2021 alone. The corporation also developed a second 5nm SoC and designed its first 4nm product recently. Those innovations will enable the corporation to substantially increase its chip revenue last year and offset its component-related financial outlays.
Huawei Decreased its Semiconductor Purchases by 23 Percent
In 2020, Huawei ranked as the world’s third-largest semiconductor customer, with purchases totaling $19 billion. However, its component spending fell by 23.5 percent from 2019 due to new restrictions put in place by the U.S. government.
Last September, Washington instituted new rules that would penalize corporations for selling certain American derived semiconductor technologies to blacklisted firms like Huawei. The telecommunications giant responded by stockpiling large quantities of electronic components before the updated policies went into effect.
Nevertheless, its once market-leading smartphone business contracted significantly after it lost access to high-performance handset parts. The conglomerate even sold off its Honor subsidiary for $15.2 billion because the U.S. sanctions made continued operation untenable.
Huawei’s declining presence in the chip market opened up space for its rivals within the Chinese mobile electronics sector. BBK, the parent company of Oppo, Vivo, OnePlus, and RealMe, paid $13.3 billion for components in 2020, up 4.9 percent year-over-year.
Along similar lines, Xiaomi spent $8.79 billion on chips last year, an annual increase of 26 percent. The firm’s smartphone part expenditures enabled it to gobble up Huawei’s market share in regions like China, Europe, and India. Gartner stated the corporation’s hardware purchases fueled the growth of its Internet of Things (IoT), wearables, and smart appliance businesses.
Xiaomi might assume Huawei’s place in the global semiconductor sector in a few years based on its recent strategic moves.