While the top 100 OEMs consumed semiconductors worth $209 billion in 2007 or a total 76% of semiconductors sold last year, pricing remains an issue for the semiconductor industry, according to Gartner.
The top application areas remain data processing and communications electronics, which represented almost three-quarters of the semiconductors consumed by the top 100 OEMs. These two segments were followed by consumer electronics, industrial, and automotive.
According to research noted in yesterday's Semiconductor DQ Monday Report from Gartner, HP was the no. 1 OEM consumer, with $16.5 billion in semiconductor demand, followed by Nokia, Dell, and Samsung, with more than $11 billion in demand each.
Gartner noted that the top OEMs have strong computer and/or mobile phone businesses. The market research company has reported that in 2007, PC shipments grew 11%, and cell phone shipments grew at double-digit rates.
Yesterday's report from Gartner pointed out that HP and Nokia grew significantly in these markets. But because they took advantage of lower-priced semiconductors, their semiconductor consumption did not grow as fast as their revenues.
The most recent data from Gartner is in line with February research from the company that reported top 10 OEM semiconductor demand of $91 billion last year, a 1% rise over 2006, but less than the semiconductor industry's 3% growth between 2006 and 2007, signaling semiconductor sales were out of sync with OEM demand.
"The semiconductor industry faces an ongoing issue - significant erosion of semiconductor content and average selling prices (ASPs), especially in core markets," Alfonso Velosa, a Gartner research director and former Intel commodity specialist, wrote in yesterday's report.
Velosa specifically made note of computer and cell phone semiconductor content pricing, which decreased almost 9% in 2007 compared with 2006.
"This pricing weakness will be an issue that semiconductor firms will need to continue to address. We see some signs that new and innovative uses of semiconductors, such as sensors, are being implemented in products by firms such as Nintendo. During the next few months, we will see a series of interesting new touchscreen-based products, particularly in computers and phones," Velosa continued.
"The semiconductor industry's opportunity lies in enabling the branded electronics firms to experiment and develop innovative products quickly enough, thus facilitating niche markets. We look forward to these developments," Velosa said.
By Suzanne Deffree, Managing Editor, News - Electronic News