Report says top ten global OEMs to cut chip spending by 7.6% in 2022

Apple was the top spender on chips for the fourth year in a row with 11.1% of the market share. Samsung’s share was 7.7%, Lenovo’s 3.5%, while Dell and BBK had 3% each.

Most of the top ten OEMs cut their spending on chips in 2022. For example, Apple reduced spending by 2.6%, while Huawei reduced it by 19% and HP by 18.9%.

Samsung and Sony were the only two companies in the top ten that increased their chip spending by 2.2% and 16.5%, respectively. Gartner attributed Samsung’s spending on foldable smartphones, while Sony’s purchases were driven by continued demand for the PlayStation 5 console.

According to Gartner, Apple reduced its spending on micro-processing units (MPUs) by 11.7% as it shifted to its own in-house-designed application processors. However, Apple increased spending on non-memory chips by 2.8%. Unlike CPUs which handle a wide range of tasks, microprocessors are meant to execute specific and repetitive tasks.

Gartner analysts attribute the cost reduction to rising average selling prices (ASPs) of chips. Masatsune Yamaji, senior director analyst at Gartner, said the zero-COVID policy in China has led to severe material shortages and short-term disruptions to the electronics supply chain.

“A sluggish semiconductor shortage in the automotive, networking and industrial electronics markets, driven by chip average selling price (ASP) and accelerated semiconductor revenue growth in these markets. As a result, these factors have resulted in top OEMs increasing total semiconductor spending in 2022.” reduced its share as compared to 2021,” Yamaji said.

Although chip supply has decreased, demand for electronics has decreased due to inflation and recession fears. This has prompted enterprises to cut spending on IT hardware while users have postponed buying new equipment for the time being. Most companies have also cut thousands of jobs. Himachal Pradesh announced in November that this would shrink to 6,000 jobs by 2025. Microsoft and Google Also cut more than 20,000 jobs.

The reduction in spending on chips is also expected to impact chip suppliers’ revenues.

Last November, Gartner Revised Its global semiconductor revenue is projected to decline by 2.5% to 3.6% for 2023. According to new estimates, the semiconductor industry is expected to generate revenue of $596 billion in 2023, as opposed to $623 billion estimated earlier.