Nokia and Motorola Boost Chip Spending in 2005 and 2006

Top-ranked mobile-phone brand Nokia of Finland will boost its chip spending by 15.1 percent in 2006 as an encore to its 12.7 percent increase in 2005, according to data from iSuppli's OEM Semiconductor Spend Analysis service. Number-two mobile-phone OEM Motorola of the United States is projected to increase its semiconductor purchasing by 14.5 percent in 2006, following a 20.7 percent rise in 2005. Both companies will handily exceed the global average increase in chip spending of 7 percent in 2005 and 7.7 percent in 2006. They also will surpass the average rate of growth of semiconductor spending among wireless communications OEMs of 7.3 percent in 2005 and 6.3 percent in 2006. The figure attached presents semiconductor spending growth for the world's top-10 electronics OEMs. "The rapid increases in chip purchasing by Nokia and Motorola reflect the success the two companies have achieved in the global mobile-phone market," said Min-Sun Moon, OEM spend analyst for iSuppli. Nokia in 2005 gained 3.5 percentage points to attain a unit market share of 32.6 percent for mobile phones, according to iSuppli. Motorola in 2005 attained an 18 percent unit market share, up 3.3 percentage points from 2004. Motorola continued to gain mobile-phone market share throughout the first half of 2006, while Nokia resumed its advance in the second quarter, after a slight dip during the first three months of the year. The two mobile-phone giants also have achieved revenue growth that has greatly exceeded the industry average. Motorola's electronic equipment revenue rose to $32.6 billion in 2005, up 23.9 percent from $26.3 billion in 2004. Nokia's electronic gear revenue increased $38.1 billion in 2005, up nearly 18 percent from $32.3 billion in 2004. In contrast, average electronic equipment revenue for all OEMs tracked by iSuppli rose by just 8.3 percent between 2004 and 2005. Looking beyond the top 10 chip purchasers, China's Lenovo posted the largest increase in semiconductor spending, at 265 percent. Lenovo's chip spending was boosted by the acquisition of IBM's PC Group. This acquisition also caused IBM's chip purchasing to decrease by nearly 33 percent in 2005. Apple Computer Inc. of the United States posted the second highest OEM spending increase in 2005, at 140 percent, largely due to its strong iPod business.