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Chinese OEMs Rank in the Top 10 Semiconductor Buyers in 2018 – Gartner

OEMs

The top 10 OEMs increased their share of chip spending to 40.2 per cent in 2018, up from 39.4 per cent in 2017. Samsung Electronics and Apple remained the top two semiconductor chip buyers in 2018, representing 17.9 per cent of the total worldwide market, according to Gartner. This is a 1.6 per cent decrease compared with the previous year.

“Four Chinese original equipment manufacturers (OEMs) — Huawei, Lenovo, BBK Electronics and Xiaomi — ranked in the top 10 in 2018, up from three in 2017. On the other hand, Samsung Electronics and Apple both significantly slowed the growth of their chip spending in 2018,” said Masatsune Yamaji, senior principal analyst at Gartner. “Huawei increased its chip spending by 45 per cent, jumping in front of Dell and Lenovo to the third spot.”

Eight of the top 10 companies in 2017 remained in the top 10 in 2018, with Kingston Technology and Xiaomi replacing LG Electronics and Sony (see Table 1). Xiaomi rose eight places to the 10th position, increasing its semiconductor spending by $2.7 billion in 2018, a 63 per cent growth year over year.

Table 1. Preliminary Ranking of Top 10 Companies by Semiconductor Design TAM, Worldwide, (Millions of Dollars)

2017 Ranking 2018

Ranking

Company 2017 2018  2018 Market

Share (%)

Growth (%) 2017-2018
1 1 Samsung Electronics 40,408 43,421 9.1 7.5
2 2 Apple 38,834 41,883 8.8 7.9
5 3 Huawei 14,558 21,131 4.4 45.2
3 4 Dell 15,606 19,799 4.2 26.9
4 5 Lenovo 15,173 17,658 3.7 16.4
6 6 BBK Electronics* 11,679 13,720 2.9 17.5
7 7 HP Inc. 10,632 11,584 2.4 9.0
13 8 Kingston Technology 5,273 7,843 1.6 48.7
8 9 Hewlett Packard Enterprise 6,543 7,372 1.5 12.7
18 10 Xiaomi 4,364 7,103 1.5 62.8
Others 257,324 285,179 59.8 10.8
Total 420,393 476,693 100.0 13.4

TAM = total available market

*BBK Electronics includes Vivo and OPPO

Note: Numbers may not add to totals shown because of rounding

Source: Gartner (February 2019)

The continued market consolidation in the PC and smartphone markets had a significant impact on the semiconductor buyers’ ranking. The big Chinese smartphone OEMs, in particular, have increased their market domination by taking out or purchasing competitors. As a result, semiconductor spending by the top 10 OEMs increased significantly, and their share reached 40.2 per cent of the total semiconductor market in 2018, up from 39.4 per cent in 2017. This trend is expected to continue, which will make it harder for semiconductor vendors to maintain high margins.

Another factor impacting the market was memory prices. While the DRAM average selling price (ASP) has been high in the past two years, it is now declining. However, the impact is limited, as OEMs will increase their memory content when the ASP declines and also invest in premium models. Gartner predicts that the share of total memory chip revenue in the total semiconductor market will be 33 per cent in 2019 and 34 per cent in 2020, higher than its 31 percent share in 2017.

“With the top 10 semiconductor chip buyers commanding an increasing share of the market, technology product marketers at chip vendors must allocate a majority of their resources to their top 10 potential customers,” added Yamaji. “It is crucial that they take advantage of the open budget that is available due to the weakening memory ASPs and encourage customers to use advanced chips or increase memory content.”

Further information, “Market Insight: Top 10 Semiconductor Chip Buyers, Worldwide, 2018 (Preliminary).”

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