Chipmakers Feel Impact of Weak Dollar

NEW YORK (TheStreet) -- Market-share leadership in a business sector has strategic benefits for a company.

Market-share leadership gives a company the opportunity to issue press releases and publish pie charts in its annual reports because customers prefer to buy from it over its competitors. More significantly, it means that customers often come to the company for solutions because they are more convinced by leaders. Customers look up to leaders to provide them with decisions and solutions to their needs and wants. Market leadership also shows the financial community that the company is worth investing in.

Since last March, the dollar has weakened considerably, which will have an impact on market-share leadership. A weak dollar means that goods sold in dollars are less expensive. Companies with a large portion of foreign sales will benefit as their products are cheaper, providing customers with an impetus to buy more.

When global market share is compiled by analysts, it is typically calculated in dollars. If the product is sold by a foreign company in the currency where the company is based it is then converted into dollars to total up market share. This is usually a challenge because there are a variety of methods that could be used, such as the average conversion rate throughout the year or the conversion rate on Dec. 31. Either will give only an estimate of dollar revenue. The only accurate way is if a company converts each sale into dollars at the time of purchase. Complicating the conversion are multinational companies that sell in different currencies in each country where they have an office.