Apple now No. 1 in flash memory consumption

Computerworld - Apple has surpassed HP and all other equipment manufacturers to become the world's largest consumer of semiconductor technology, largely because of the popularity of its mobile devices.

According to market research firm IHS iSuppli, in 2010, Apple bought $17.5 billion worth of semiconductors, an increase of 79.6% from the $9.7 billion it spent in 2009.

"Apple's surge to leadership in semiconductor spending in 2010 was driven by the overwhelming success of its wireless products, namely the iPhone and the iPad," said iSuppli analyst Wenlie Ye. "These products consume enormous quantities of NAND flash memory, which is also found in the Apple iPod. Because of this, Apple in 2010 was the world's No. 1 purchaser of NAND flash."

While Apple is also in the top five manufacturers that purchase microprocessors, it was NAND flash that propelled it into the top spot overall, Ye said. "For Apple, which right now spends 60% of its semiconductor purchasing budget on wireless products, processors take the passenger seat when compared to NAND flash. "

In 2010, HP lead the market in microprocessor purchases with $5.3 billion spent, followed by Dell with $4.2 billion and Apple with $2.5 billion.

NAND flash, which is used to make solid-state drives (SSDs), is a nonvolatile storage medium, meaning when it's powered off it continues to retain data, unlike DRAM.

Earlier this year, iSuppli figures showed Apple's iPad was leading an almost five-fold surge in NAND flash memory use this year as consumers gobble up tablets in increasing numbers.

According to iSuppli, shipments of NAND for tablets show no sign of slowing down, and will hit a projected 12.3 exabytes of capacity shipped by 2014. When measured against the total supply of NAND flash, memory in tablets will represent 11.8% of the supply this year, up from a 4.3% in 2010. By 2014, tablet memory will represent 16% of all NAND flash.

Apple's ranking among equipment manufacturers rose two places to get to the number one spot. It surpassed HP in the U.S. and Samsung Electronics in South Korea, which had been no. 1 and no. 2, respectively.

In 2011 and beyond, Apple is likely to continue increasing its semiconductor spending at an above-average pace, allowing the company to extend its lead over HP and Samsung, iSuppli said. In 2011 Apple's semiconductor spending is expected to exceed that of HP by $7.5 billion, up from $2.4 billion in 2010.

Top 10 semiconductor buyers in 2010/2011

While traditionally hot competitors, Apple and HP's consumption levels of NAND flash is an indication that the two companies are taking fundamentally different development paths, according to iSuppli.

Apple spent about 61% of its semiconductor budget in 2010 on wireless products such as the iPhone and iPad. In contrast, HP spent 82% of its semiconductor spending on computer products like desktops, notebooks and servers.