China's Lenovo joins ranks of top OEM chip buyers in 2005

Marking a milestone in China's ascension in the global electronics industry, one of the nation's companies will enter the ranks of the world's top OEM buyers of semiconductors for the first time in 2005, according to the latest data from iSuppli Corp.'s Semiconductor Spending Analysis service.

China's leading PC maker, Lenovo Group, is expected to emerge as the world's ninth-largest OEM semiconductor buyer in 2005, with chip purchases amounting to $4.3 billion for the year. Lenovo's semiconductor buying activities have been multiplied by purchase of IBM's PC operations, which was announced in December, 2004. IBM's PC purchasing activities are being shifted to Lenovo's control this year.

Due to the addition of IBM's PC business, Lenovo's semiconductor purchases are expected to increase by more than a factor of four from about $1 billion in 2004 and its ranking will rocket up from 36th place last year, iSuppli predicts.

With its move into the top-10 ranks, Lenovo will stand shoulder to shoulder in terms of chip buying with some of the world's top technology brand names, including number-one ranked Hewlett-Packard Co., second-placed Dell Inc. and number-three Nokia. Such companies wield enormous power in the worldwide chip market, with their capability to obtain favorable terms from component makers. Because of this, these companies can make or break products and suppliers in the semiconductor industry.

As China continues to advance in the worldwide electronics industry, iSuppli expects to see more of the nation's companies enter the top chip-buying ranks.

On the opposite end of the spectrum, IBM is expected to fall from the ranks of the top-10 chip buyers in 2005, declining to 16th place in 2005, down from ninth place in 2004. With the sale of its high-volume PC business, IBM's chip-purchasing activities have been significantly diminished.

While Lenovo and IBM are seeing rapid shifts in their rankings, Hewlett-Packard and Dell are expected to retain their customary first- and second-place positions in terms of chip buying in 2005. Hewlett-Packard's semiconductor spending will rise to $13.7 billion in 2005, up 9.7 percent from $12.5 billion in 2004-the second-largest increase among the top-10 OEM chip buyers. Dell's spending will rise to $12.5 billion, up 15.9 percent from $10.7 billion in 2004, marking the largest increase among the top 10.

Dell and Hewlett-Packard are expected to exceed the industry average of a 6.8 percent increase in OEM chip purchasing in 2005. Besides Lenovo, other top-10 OEMs expected to grow their chip purchasing in 2005 by a faster-than-average rate include Motorola Inc. and Samsung Electronics Co. Ltd.

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