Leading-brand companies remained at the centre of the semiconductor world, accounting for $104.3 billion of semiconductors on a design total available market (TAM)* basis in 2010 — over a third of semiconductor vendors’ worldwide chip revenue — according to Gartner, Inc. This was a year-on-year increase of approximately $26.3 billion, up 33.7 per cent from 2009.
Eight of the top 10 companies in 2009 remained in the top 10 in 2010. These top 10 companies accounted for a third of all semiconductor demand in 2010 with three companies each from the Americas, Asia/Pacific and Japan and one company from EMEA making up the top 10.
The major growth drivers in 2010 were mobile PCs, smartphones and LCD TVs. PC vendors such as HP, Apple, Dell and Lenovo increased their design TAM greatly in 2010 (see Table 1) thanks to strong demand for mobile PCs. Samsung Electronics succeeded in riding the trend of the smartphone boom, while Nokia struggled. Samsung, Sony, Toshiba and Panasonic enjoyed market growth from flat-panel TVs, which saw them accelerate their design TAM.
Apple is leading the new competitive landscape of the IT and electronics industry. As a new-style vertically integrated company, Apple provides hardware, software and services for PCs, smartphones, portable media players and media tablets (the new killer application), while the production is outsourced to electronics manufacturing service (EMS) providers. While its TV business is currently small, it is continuing to invest in the TV market by shipping new internet protocol (IP) set-top boxes for future growth. Google also intends to expand its platform business to the TV market, and Gartner said that the TV service platform market is a key growth segment in the coming years.
“Semiconductor device vendors should closely monitor the changing competition structure of the target market,” said Masatsune Yamaji, senior research analyst at Gartner. “Do not just listen to the requirements of the current market leaders. Have a dedicated sales team, with business development sales metrics, looking for new market entrants who will be the next-generation market leaders.”
On a purchasing TAM basis, four of the top 10 companies are so-called contract manufacturers. As more brand companies are increasing their production outsourcing to original design manufacturers (ODMs) and EMS providers, the semiconductor procurement by them has increased year by year.
“Judging from purchasing TAM, Asia/Pacific, and especially China, offers the greatest opportunities in most of the device and application market segments,” Mr Yamaji said. “It will be difficult for most of the semiconductor device vendors, especially replaceable general-purpose device vendors, to achieve the full design-win benefit without establishing a strong distribution network in Asia/Pacific.”
Table 1: Top 10 Semiconductor Design TAM by Company, Worldwide (Millions of Dollars)
|2009||2010||2009-2010 Growth (%)||2010 Market Share (%)|
TAM = total available market
Source: Gartner (January 2011)
“Semiconductor device vendors must pay attention not just to the design and purchasing TAM by company, but also to that by region. This is the key to avoiding inappropriate sales resource allocation,” Mr Yamaji said. “Semiconductor device vendors must keep an eye on the design-win opportunity in the US, while they must establish a strong distribution network in China.”