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Apple gobbled up the most chips in 2013 - is that bad?

Apple gobbled up the most chips in 2013 - is that bad?

Apple easily outspent every other technology company in buying up chips during 2013

Apple outspent Samsung on semiconductor purchases by more than $8 billion in 2013, as it snapped up more chips than any other company in the technology business.

According to IHS Technology, Apple spent $US30.3 billion on semiconductors alone in 2013, compared to the $US22.8 billion that Samsung spent for components. Hewlett-Packard, Lenovo, and Dell rounded out the top five.

Why is this important? Not only does it demonstrate the relative complexity and cost of the components that end up in Apple's devices, but it also indicates the importance of what analysts call a vertically integrated model: Samsung's number does not include components that it "bought" from other Samsung divisions inside the Korean giant. On those components, such as flash memory, for example, Samsung could avoid paying for the profit margin for those suppliers, IHS noted. (Granted, Apple has racked up billions in profits with products that specifically avoid the low-end market.)

That "profit tax" won't necessarily mean that much when supplies of Apple's high-end iPhone 5s are concerned. But as Apple, Samsung and others vie for emerging markets, reducing the manufacturing cost--and thus the price charged to consumers--will become a factor, IHS analyst Myson Robles-Bruce noted.

Not surprisingly, hardware makers spent the most to build out their handsets, then tablets, followed by wireless infrastructure. Viewed another way, the wireless radios within those mobile devices attracted 31 percent of all money spent for chips, with Apple, Samsung, Huawei, ZTE and LG leading the way.

All told, the served available market (SAM) for semiconductor spending reached $US237.2 billion in 2013, up nearly 5 per cent after spending dipped from $US231.7 billion in 2011 to $US226.7 billion in 2012, IHS said.


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