June 12, 2011

Apple called largest chip buyer

NEW YORK - Driven by the success of the iPhone and iPad, Apple Inc. has become the world's largest buyer of chips for computers and phones, a research firm said.

Apple bought $17.5 billion worth of chips last year, surpassing computer maker Hewlett-Packard Co. as the largest consumer, IHS iSuppli said Wednesday. That was an increase of 80 percent from the year before, reflecting Apple's continuing sales surge.

An iPhone contains about $80 worth of chips, according to iSuppli. The chips include a central processor that acts as the brains of the device, radio chips that let it talk to cell towers, and an audio chip that converts voice into a stream of data.

The finding that Apple is the No. 1 buyer cements its standing as a company that has the clout and the cash to buy chips and other crucial components such as touch screens when other companies struggle because of supply constraints.

Apple said that, in January, it spent $3.9 billion on long-term contracts to secure supplies for the next two years of a "very strategic" unidentified component. Few companies are able to commit that much money.

Last summer, high-tech manufacturers scrambled to buy chips as sales started reviving after the recession and chip makers had yet to ramp production back up. But Apple reported no chip-supply problems; it blamed shortages of iPhones and iPads instead on limited assembly-line capacity.

Both iPhones and iPads use large amounts of expensive flash memory, accounting for much of Apple's chip consumption.

Apple sold 48 million iPhones last year. PC industry sales grew 14 percent, iSuppli said. The iPad went on sale last year.

Associated Press Jun. 9, 2011 12:00 AM

Apple called largest chip buyer

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