HP, Samsung, Nokia Spending More on Chips in 2010

Hewlett-Packard, Nokia, Samsung, Apple and other OEMs will spend 13 percent more on microprocessors in 2010 than in the previous year, predicts a report from iSuppli. These numbers seem to show that semiconductor prices have stabilized, while demand for consumer and businesses electronics has increased.

Hewlett-Packard, Apple, Samsung, Nokia and other OEMs are poised to spend 13 percent more on chips in 2010 than they did in 2009, iSuppli predicted in a March 17 report.

In 2009, when the global recession led consumers and businesses to cut back on buying electronics and IT equipment, OEMs spent about $157 billion on semiconductors. In 2010, these same OEMs are likely to increase their chip spending to $177.9 billion, according to iSuppli.

In addition, EMS (electronic manufacturing services) providers, such as Foxconn Electronics, Flextronics International and Jabil Circuit, will increase their semiconductor spending this year by about 15 percent, iSuppli predicted. Overall iSuppli said it expects these manufacturers to spend $37.7 billion on chips in 2010.

The iSuppli report concluded that this increased spending by OEMs and EMSes means that semiconductor prices have stabilized. The report also found that consumers and businesses are preparing to spend more on electronics and IT equipment in 2010, and OEMs are preparing new products for sale to meet demand.

"The increase in OEM semiconductor spending in 2010 represents a turnaround for the market from 2009," Min-Sun Moon, an iSuppli analyst, wrote in the report summary. "Spending last year plunged by 16.1 percent-due not only to a decline in the average selling price of chips but also [to] a drop in shipments. Although still cautious, electronic OEMs this year are gearing up to gain more share in their respective markets, a strategy that will translate into greater semiconductor spending."

In 2010, HP will remain the largest global buyer of chips. The iSuppli report predicted that HP, which remains the world's top producer of PCs, will spend about $12.6 billion on semiconductors this year.

Of the top five OEMs, Samsung is second and is expected to spend about $12.5 billion on chips in 2010. iSuppli said it believes Samsung will move past HP in 2011 thanks to its portfolio of new handset devices and televisions.

The other top five OEMs are Nokia, Apple and Dell.

Of the EMS providers, Foxconn, which produces devices such as the Apple iPhone, iPod and iPad and the Nintendo Wii, is expected to spend about $22.6 billion on semiconductors in 2010.