Samsung has recently surpassed Apple as the world’s biggest buyer of semiconductors, according to Gartner. The Korean company’s smartphone lineup such as the Galaxy S III and the Galaxy Note II, led to a 29% surge in chip purchases in 2012, taking its semiconductor spending past that of any other company. Samsung spent a total of $23.9 billion on chips in 2012 according to a statement made by Gartner. Although Apple’s semiconductor spending rose almost 14%, its $21.4 billion bill meant it's no longer spending more on chips than everyone else. Samsung’s wide range of devices are being credited for the increase.

The South Korean manufacturer’s wide range of smartphones and tablets cater to all three market tiers, the high end, low end, and everything in between. Apple on the other hand has always been about making premium products for the high end of the market. This business model that has been called into question in the recent weeks as Samsung increases its share of the smartphone market.

Samsung offers a wide range of smartphones and tablets that cater to all three market tiers — the high end, the low end, and everything in the middle. Apple, on the other hand, has always been about making premium products for the high end of the market. This is a business model that has been called into question a lot in recent weeks as Samsung increases its share of the smartphone market.

This year, Samsung’s share is expected to reach 35%, making the gap between Apple and Samsung at the top of the market even greater. The only way Apple can prevent this according to certain analysts is to reduce the profit margins of the iPhone and make it cheaper, or alternatively, to introduce a low-cost “budget” smartphone. Rumors are currently claiming this low-cost iPhone will possibly make its debut sometime this year, but other reports have dismissed those claims. Whatever the case may be, Apple has to do something to keep up with the competition. The Korean company’s phones and tablets have been so successful that it’s been able to avoid a slump in PC demand that caused global chip sales to fall 3% during 2012 to $297.6 billion.

This past year, six of the top ten chip buyers ended up cutting their spending because of a slump in computer sales according to Gartner. HP, which was ranked third, pared expenditure 13% to $14 billion and the fourth-placed Dell cut spending by $8.6 billion. Sony on the other hand ended up seeing a small boost of 1.9%, which saw its ranking rise from eight to fifth. Still, it’s been pretty grim for most of the companies.

Source: Bloomberg