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Apple Is Largest Chip Buyer

June 9, 2011

A research firm said Wednesday that Apple Inc. has become the world’s largest buyer of chips for computer and phones.

IHS iSuppli said Apple bought $17.5 billion worth of chips last year, surpassing computer maker Hewlett-Packard Co.  This was an increase of 80 percent from the year before, which directly reflects Apple’s continuing sales surge.

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

Apple said in January that it had spent $3.9 billion on long-term contracts to secure supplies for the next two years of a “very strategic” component it would not name. 

High-tech manufacturers were scrambling to buy chips as sales started reviving last summer after the recession, and chip-makers had yet to ramp production back up.  However, Apple reported no chip supply problems and blamed shortages of iPhones and iPads on limited assembly-line capacity.

Apple sold 48 million iPhones last year, up 89 percent from the previous year.  ISuppli said that PC industry sales grew 14 percent.

The $17.5 billion figure means over a third of Apple’s “cost of revenue” went toward chip purchases last year.

Samsung Electronics Co. and PC maker Dell Inc. were the number 3 and 4 chip buyers.

ISuppli expects Apple to extend its lead this year by buying chips for $22.4 billion, compared with $14.8 billion at HP.

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