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Samsung overtakes Apple to become biggest semiconductor buyer in 2012

Samsung surged past Apple last year to become the world's leading manufacturer of smartphones and now Gartner says the South Korean tech giant also overtook Apple in 2012 as the biggest buyer of semiconductors.

Together, Samsung and Apple gobbled up 15 per cent of all semiconductors last year, spending $45.3 billion (£28.6 billion) in 2012 on processors and chipsets for their mobile devices and computer products, even as the overall semiconductor market shrunk by three per cent, the research firm said. The two tech giants increased their semiconductor spending by $7.9 billion (£5 billion) from 2011, according to Gartner (see the full Top 10 chart below).

Samsung wound up shelling out $23.9 billion (£15.1 billion) on semiconductors last year, a 28.9 per cent increase from the $18.6 billion (£11.7 billion) the company spent in 2011 and representing an eight per cent share of total semiconductor spending in 2012. Apple's final semiconductor bill of $21.4 billion (£13.5 billion) represented a 13.6 per cent jump from the $18.8 billion (£11.9 billion) the company spent on chips in 2011, and it wound up buying 7.2 per cent of semiconductors sold last year.

Samsung, of course, manufactured a good portion of its own, Apple's, and others' semiconductors - for the purposes of its year-end report, Gartner treated the South Korean company as a consumer not a seller.

While Samsung and Apple each grew their semiconductor purchasing by double digits on the year, a number of other companies - including some of the world's biggest PC manufacturers - went in the opposite direction, Gartner reported.

"Although Samsung and Apple continue to go from strength to strength, other leading electronic equipment makers fared less well, and six of the top 10 reduced their demand in 2012," Masatsune Yamaji, principal research analyst at Gartner, said in a statement. "In addition to a weak macroeconomic situation, a dramatic change in consumer demand contributed to a reduction in semiconductor demand in 2012.

"The PC market still represented the largest sector for chip demand, but desktop and mobile PCs did not sell well, as consumers' interest shifted to new mobile computing devices like smartphones and media tablets. This shift caused a substantial decrease in semiconductor demand in 2012, as the semiconductor content of a smartphone or a media tablet is far less than that of a PC."

Indeed, Hewlett-Packard and Dell both cut their semiconductor spending by around 13 per cent in 2012. HP, the third-biggest buyer of computer chips and other semiconductor products last year, spent $14 billion (£8.8 billion) on semiconductors in 2012, down from $16 billion (£10.1 billion) in 2011. Fourth-place Dell's semiconductor bill went from $9.9 billion (£6.25 billion) in 2011 to $8.6 billion (£5.4 billion) last year.

Another major PC player, Toshiba, dropped a spot in Gartner's rankings of semiconductor spenders, going from sixth place with $7.8 billion (£4.9 billion) in 2011 spending to seventh place with $6.5 billion (£4.1 billion) in 2012. Aside from Samsung and Apple, the only other members of Gartner's Top 10 list to increase their semiconductor spending year-over-year were Sony - $7.9 billion (£5 billion) and in fifth place - and Lenovo - $7.8 billion (£4.9 billion) and in sixth place - though both of those companies only increased their spending marginally.

While PC makers were clearly tightening their belts in 2012, it was a company formerly atop the cell phone heap that fell the most. Nokia, once upon a time the biggest handset maker the world, ponied up $8.6 billion (£5.4 billion) for semiconductors in 2011 but just $5 billion (£3.2 billion) in 2012, a staggering decline of 42.6 per cent. The Finnish phone manufacturer fell from fifth place on the Gartner list to tenth and was responsible for just 1.7 per cent of all semiconductor spending last year.

Rounding out the Top 10 were LG Electronics - $6 billion (£3.8 billion) spent in 2012 and in eighth place - and Cisco - $5.4 billion (£3.4 billion) and in ninth place.

Together, those 10 companies delivered $106.4 billion (£67.2 billion) to semiconductor manufacturers in 2012, or nearly 36 per cent of the industry's worldwide revenue of $297.6 billion (£188 billion), Gartner reported. All other buyers of semiconductors spent $191.1 billion (£120.7 billion) last year, down 4.3 per cent from the $199.7 billion (£126.1 billion) the field spent in 2011.