China-US tariff tiff, Brexit, and a crap economy: Why OEMs spent $56bn less on semiconductors last year

Market flopped as all the biggest buyers kept short arms in deep pockets


Almost all of the top 10 biggest corporate consumers of semiconductors bought fewer chips last year due to softening economies, in part caused by political uncertainty: Brexit and the US-China trade battle among them.

Numbers crunched by Gartner show the overall sector shrank by 11.9 per cent year-on-year to $474.631bn – Chinese tat bazaar Xiaomi was the only OEM to buy more chips than in the previous 12 months.

Apple pared back its silicon bill by 12.7 per cent to $36.13bn: it was a bad year for the iPhone as demand fell off a cliff and the company closed of its fiscal year ended 29 September with $22bn less in smartphone revenue. Countering this were sales of the Watch and AirPods.

Shoved into second spot – for the first time in 36 months – was Apple phone nemesis Samsung, which shelled out $33.4bn on semiconductors, equating to a decline of a whopping 21.4 per cent. It was a disastrous year for Samsung as group profits halved.

Surprisingly, Huawei's silicon purchases barely slowed down in 2019, decreasing by a relatively meagre 1.8 per cent to $20.8bn. This is in spite of being added to a US government entity list, which has all but decimated Huawei's handset business outside of China. Huawei occupies the number-three slot for semi spending, its position unchanged from the previous year.

"The members of the top five did not change in 2019, but all of them decreased chip spending through 2019," said Masatsune Yamaji, senior principal analyst at Gartner.

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"The major reason was the sharp memory price decline. Memory prices were extremely high and a serious burden for many OEMs in 2018, representing 45 per cent of their total chip spending. However, the situation improved in 2019. The top five OEMs reduced their memory spending share to 36 per cent in 2019 while improving the computing performance of their products with better processors and greater memory content."

The sole company in the top 10 to increase spending in real terms was Xiaomi, which saw its silicon bill rise by 1.4 per cent compared to the previous year.

Xiaomi, which spent 1.4 per cent more on semis in the year to $7.016bn, remains a giant of the Asian tech scene, and in recent times has embarked on an aggressive expansion in Europe. By Q3 2019, it occupied 10 per cent of the European handset market, an increase of 73 per cent on the previous year. That regional focus will run on this year, with particular efforts put into the premium tranche of the smartphone industry.

Gartner claimed the "global uncertainty and the slowing macroeconomy had a significant impact on semiconductor buyers in 2019. Political friction including the US-China trade war, Brexit, conflict between Japan and South Korea and protests in Hong Kong increased to slow growth."

Yamaji added: "This macroeconomic environment cooled demand for a wide range of electronics equipment. Total electronic equipment revenue decreased $4.7bn in 2019."

Tech infrastructure maker Dell Technologies came in fourth with chip spending of $16.25bn, down 15 per cent. Dell was one of the PC makers to bemoan Intel's chip shortages and is now facing some issues on the server front too.

Lenovo bought $16.05bn worth of chips in the year, down 9.2 per cent; consumer device maker BBK Electronics fell 8.8 per cent to $12.65bn; HP Inc forked out $10.42bn, down 9 per cent; Hewlett Packard Enterprise dropped 14.6 per cent to $6.215bn; and Hon Hai, which trades as Foxconn, purchased $6.116bn of semiconductors in 2019, a decline of 7.1 per cent.

The trade war between China and the US looks to be abating, though with a certain unpredictable orange-faced loon in the White House that could change anytime soon. Brexit has entered a new stage of negotiating pain after the UK left the EU on 31 January.

Of course, the new worry for some is the outbreak of the coronavirus. It has hit semiconductor manufacturers' share price in recent weeks, caused disruption to plans for MWC, and has the potential to wreak havoc on the supply given the level of tech manufacturing in China, where the bio-nasty started.

Semiconductor sales are forecast to bounce this year, relative to last, and the manufacturers will be praying that the rapidly spreading infection doesn't put a big dent in their business this year. ®


Intel CPU interconnects can be exploited by malware to leak encryption keys and other info, academic study finds

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Doctoral student Riccardo Paccagnella, master's student Licheng Luo, and assistant professor Christopher Fletcher, all from the University of Illinois at Urbana-Champaign, delved into the way CPU ring interconnects work, and found they can be abused for side-channel attacks. The upshot is that one application can infer another application's private memory and snoop on the user's key presses.

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Linus Torvalds issues early Linux Kernel update to fix swapfile SNAFU

‘Subtle and very nasty bug’ meant 5.12 rc1 could trash entire filesystems

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Remember that day in March 2020 when you were asked to get the business working from home – tomorrow, if possible? Here's how that worked out

IT pros from orgs large and small tell The Reg the tech delivered, mostly, but couriers and home Wi-Fi suddenly became your problem

Covid Logfile Brianna Haley was given one day to be ready to roll out Zoom for 13,000 users at over 1,000 sites.

Haley* is a project analyst for a large healthcare provider that, as COVID-19 marched across the world in March 2020, realised imminent lockdowns meant it would soon be unable to consult with patients.

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The torture garden of Microsoft Exchange: Grant us the serenity to accept what they cannot EOL

Time to fix those legacy evils, though.... right?

Column It is the monster which corrupts all it touches. It is an energy-sucking vampire that thrives on the pain it promotes. It cannot be killed, but grows afresh as each manifestation outdoes the last in awfulness and horror. It is Microsoft Exchange and its drooling minion, Outlook.

Let us start with the most numerous of its victims, the end users. Chances are, you are one. You may be numbed by lifelong exposure, your pain receptors and critical faculties burned out though years of corrosion. You might be like me, an habitual avoider whose work requirements periodically force its tentacles back in through the orifices.

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Just when you thought it was safe to enjoy a beer: Beware the downloaded patch applied in haste

Let us tell you a tale of the Mailman's Apprentice

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US National Security Council urges review of Exchange Servers in wake of Hafnium attack

Don't just patch, check for p0wnage, says top natsec team

The Biden administration has urged users of Microsoft's Exchange mail and messaging server to ensure they have not fallen victim to the recently-detected "Hafnium" attack on Exchange Server that Microsoft says originated in China.

Microsoft revealed the attack last week and released Exchange security updates.

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Delayed, overbudget and broken. Of course Microsoft's finest would be found in NASA's Orion

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BORK!BORK!BORK! Getting astronauts to the Moon or Mars is the least of NASA's problems. Persuading Microsoft Windows not to fall over along the way is apparently a far greater challenge.

Spotted by Register reader Scott during a visit to the otherwise excellent Space Center Houston, there is something all too real lurking within the mock-up of the Orion capsule in which NASA hopes to send its astronauts for jaunts beyond low Earth orbit.

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NASA shows Mars that humans can drive a remote control space tank at .01 km/h

Perseverance takes first drive around landing spot named in honor of seminal sci-fi author Octavia E. Butler

NASA’s Perseverance rover trekked across Mars for the first time last Thursday, March 4, 2021.

The vehicle went four whole meters forward, turned 150 degrees to the left, then moved another two-and-a-half meters. The entire drive covered a whopping 6.5 m (21.3 feet) across Martian terrain. The journey took about 33 minutes.

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University of the Highlands and Islands shuts down campuses as it deals with 'ongoing cyber incident'

Ten letters, starts with R, ends with E, three syllables

The University of the Highlands and Islands (UHI) in Scotland is fending off "an ongoing cyber incident" that has shut down its campuses.

In a message to students and staff yesterday afternoon, the institution, which spans 13 locations across the northernmost part of the UK, warned that "most services" – including its Brightspace virtual learning environment – were affected.

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