Four Chinese original equipment manufacturers (OEMs) — Huawei, Lenovo, BBK Electronics and Xiaomi — ranked in the top 10 of Gartner’s Market Insight: Top 10 Semiconductor Chip Buyers, 2018, up from three in 2017.
Although Samsung Electronics and Apple remained the top two semiconductor chip buyers in 2018, representing 17.9% of the total worldwide market, they both significantly slowed the growth of their chip spending.
Huawei increased its chip spending by 45%, jumping in front of Dell and Lenovo to the third spot.
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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. Xiaomi rose eight places to the 10th position, increasing its semiconductor spending by $2.7 billion in 2018, a 63% growth year over year.
According to Gartner, the buyers’ ranking was significantly impacted by consolidation in the smartphone and PC markets. The big Chinese smartphone OEMs, in particular, have increased their market domination by taking out or purchasing competitors.
This also meant that the top OEMs’ spending increased and their share reached 40.2% of the total semiconductor market in 2018, up from 39.4% in 2017. This trend is expected to continue, which will make it more difficult for semiconductor vendors to maintain high margins.
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Memory prices also impacted the market. Despite being high in the past two years, the Dynamic random-access memory (DRAM) average selling price (ASP) is now declining. However, the impact is limited, as OEMs will increase their memory content when the ASP drops and also invest in premium models. Gartner predicts that the share of total memory chip revenue in the total semiconductor market will be 33% in 2019 and 34% in 2020, higher than its 31% 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,” said Masatsune Yamaji, senior principal analyst at Gartner. “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.”