Lenovo to be a top 10 chip buyer in 2005

China's Lenovo will become the ninth biggest chip buyer in the world after buying IBM's PC division.

Chinese personal computer maker Lenovo Group will leap to ninth place in the global chip purchasing ranks this year, thanks to its acquisition of IBM Corp.'s PC division, according to a market research group.

Lenovo's increased purchasing power affects the entire supply chain of the computer industry, and could cause changes leading to job losses and corporate decline in some places, while new areas prosper. In the U.S., for example, some companies are already starting to shift PC assembly work to Asia, where labor is cheaper.

"Assembly will gradually shift to China. [But] for the key chips and components inside a PC, it will be all the same guys," said Tony Tseng, a computer industry analyst for Merrill Lynch in Taipei.

Lenovo will require around US$4.27 billion worth of semiconductors to put inside PCs this year, up from US$1.01 billion last year, when it ranked 36th in the world, iSuppli said Wednesday. It will effectively replace IBM, which will fall to number 16 in the world, from the ninth spot last year.

Most PC parts are already made in Asia, except vital components like central processors, hard drives, and memory chips. But a lot of PC assembly is still done in the U.S. for strategic reasons, and much of that will likely shift to Asia in the coming few yeas, Tseng said.

Some companies, like Taiwan's ProMOS Technologies, are already looking to Lenovo for new business. The memory chip maker plans to invest US$2.5 million in China to make flash memory cards for personal computers.

"We decided to enter this business after Lenovo bought IBM's PC division. We want to be one of their suppliers," said Albert Lin, a vice president at ProMOS.

Lenovo completed the US$1.25 billion deal with IBM in May, transforming the Chinese company into a US$13 billion a year computer powerhouse, with 19,000 employees and expected shipments of around 14 million PCs. The Chinese PC maker is still small compared to the top companies. Hewlett-Packard, the number one chip purchaser on iSuppli's list, has 150,000 employees and took in US$79.9 billion in revenue during its 2004 fiscal year.

iSuppli predicted HP would buy about US$13.71 billion worth of chips in 2005, while Dell Inc. would purchase the second largest amount at US$12.46 billion.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Dan Nystedt

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Kurt Hegetschweiler

Brother PocketJet PJ-773 A4 Portable Thermal Printer

It’s perfect for mobile workers. Just take it out — it’s small enough to sit anywhere — turn it on, load a sheet of paper, and start printing.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?