Here’s Why Apple Buys More Chips Than Rivals

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The widely expected expansion of Apple’s (NASDAQ:AAPL) product line this year will keep the company in its position as the world’s largest chip buyer, according to a report from researcher IHS iSuppli. Apple is expected to spend $28 billion on semiconductors this year, way ahead of the $14.9 billion from second-placed Samsung. Hewlett-Packard (NYSE:HPQ) and Dell (NASDAQ:DELL) follow the world’s top two smartphone makers.

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The data forecasts that Apple’s chip expenses will increase by 15.1 percent, up from $24.3 billion in 2011. Samsung’s spending is predicted to be up by just 0.3 percent from last year, while half of the companies in the report’s top 10 — Hewlett-Packard, Dell, Panasonic (NYSE:PC), Cisco (NASDAQ:CSCO), and Fujitsu — are expected to reduce their chip expenses. Sony (NYSE:SNE), Canon (NYSE:CAJ), and Toshiba are the other three companies among the top ten that are predicted to see an increase in spending.

According to the report, Apple’s lead has been maintained because the company continues to see strong demand for its products and has held “beneficial relationships” with suppliers, helping it command lower prices and demand quicker delivery.

“It’s well known that Apple has already conquered the smartphone and tablet segments — but behind the scenes the company is engaging in another kind of conquest: the dominance of the electronics supply chain,” the IHS report said.  “Such a dominant position provides critical benefits, allowing one to dictate semiconductor pricing, control product roadmaps and obtain guaranteed supply and delivery. For Apple, these benefits translate into competitive advantages, letting it offer more advanced products at lower prices, faster and more reliably than the competition.”

Apple is also expected to grow its chip spending in 2013, by 12.3 percent, and will continue to outgrow other major manufacturers.

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