Small companies are the key to chip success

Picture courtesy of Wikimedia CommonsOf the 165,000 companies worldwide that buy semiconductor chips, the top 10 account for nearly 40 percent of total revenues, those between 11 and to 100 spend about 30 percent, while the rest also spend 30 percent.

But, according to data provided by Gartner, the top 10 have cut orders over the last five years and that’s led to challenging times for the semiconductor vendors, which are worried about the risks involved.

Masatsune Yamaji, a senior research analyst at Gartner, said disruption in the last few years have shown semiconductor vendors may have put too many of their eggs in one basket. “To overcome the risk, some semiconductor vendors have tried to increase their business with small customers, while others are also realising that they should adjust their strategies to do this,” Yamaji said.

And there is considerable room for sales to smaller businesses. China has gazillions of small organisations which spent $14.9 billion in 2014 with growth particularly strong in the tablet and smartphone sectors.

And the increase in the number of connected things after 2017 will be considerable. Margins are made by using semiconductor distributors – their bread and butter is general purpose components.