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Samsung, one of the world’s largest consumer of chips and consumer electronics, expects crunch to create problems for its business in the next quarter, said Co-Chief Executive Officer Koh Dong-jin during the annual general meeting in Seoul. The company is also considering skipping the launch of the new Galaxy Note – one of its best-selling models – this year, however, Koh said that was aimed at improving its system.
Giants in the industry from Continental AG to Renesas Electronics Corp. and Innolux Corp in recent weeks warned of a longer-than-expected failure due to the unprecedented demand of the Covid era for everything from cars to console games and mobile devices. Volkswagen AG said this week it had lost production of about 100,000 vehicles worldwide. In North America, silicon deficits and extreme weather combined have led to the over-production of Toyota Motor Corp and Honda Motor Co. The fear of an explosion, which initially hit car makers, could now disrupt a major technology industry.
“There is a huge imbalance in the sale and demand for chips in the IT industry worldwide,” said Koh, who manages the IT and mobile division. “While the situation is dire, our business leaders are meeting with partners overseas to resolve these issues. It is difficult to say that the shortfall problem has been resolved by 100%.”
Samsung, which makes the world’s largest smartphones, is working with its overseas partners to resolve inequalities and avoid potential problems in their business, said co-manager. Its shares fell 0.6% in Seoul on Wednesday, with Asian suppliers and builders including Taiwan Semiconductor Manufacturing Co. and SK Hynix Inc. they also fell.
Chipmakers like Samsung and TSMC are at the forefront of the global effort to close the supply chain of semiconductors, building blocks of a plethora of consumer gadgets. The shortage has closed off automatic plants around the world and is now threatening the supply of other products. While the Korean company is a leading manufacturer of the silicon-made backpack after TSMC, it relies on suppliers and foreign manufacturers for certain components such as power management and radio chips.
Covid’s high demand for Smartphones also extends to Qualcomm Inc.’s Snapdragon chip stores, processors to mobile devices. Qualcomm designs chips, also known as processor processors, but relies on Samsung and TSMC to produce them and Taiwan’s chipmaker power has a problem.
“The tightening of the availability of Qualcomm AP chips produced by TSMC affects everyone except Apple,” said MS Hwang, an analyst at Samsung Securities. affected by the increase in LCD panel numbers. ”
Consistently, the production of Samsung itself disappeared last month. Its fab in Austin, Texas – which makes chips for both indoor and outdoor use – was set aside in February for national power and never resumed full production. The emerging deficit in the production of Qualcomm 5G chips typically could reduce global smartphone releases by 5% in the second quarter, according to firm research firm Trendforce. But the only exception is likely to affect Samsung’s mid-range phones and laptops in addition to its high-end models or server chips, says Greg Roh, senior vice president at HMC Securities.
“When Samsung talks publicly about future products, you know that silicon crunch is critical,” said Avi Greengart, Techsponential technology analyst and founder.
Cararmers were first hit by a chip crunch in part due to poor inventory and are expected to miss out on $ 61 million in sales this year alone. Honda Motor Co. on Wednesday they said they would temporarily suspend a particular product next week for most American and Canadian plants, underscoring the problem of sustainability.
Some analysts say the shortfall could be significantly lifted in the coming months. But what is worrying is that tight supply in certain categories – such as in highly mature semiconductors when it takes time to build capacity – could end up disrupting the consumer electronics industry and rising prices if it continues. Semiconductors are now close to the top official systems from Washington to Brussels.
At the same time, China’s insatiable craving for chips – promoted in part by its rapid recovery from the epidemic – and the collections of goods by local companies exacerbated demand. Sales of the country’s industrial sector increased by 18% to 891.1 billion yuan ($ 137 billion) by 2020, China Semiconductor Industry Association chairman Zhou Zixue told a conference in Shanghai on Wednesday.
“The shortage of IC will be a problem to disrupt purchases in the next six months,” said Charles Shum, a Bloomberg Intelligence analyst.
On Tuesday, Hon Hai Precision Industry Co – which includes most of the world’s iPhones – joined a group of industry executives who emphasized that it would take time to resolve the inequalities demanded and offered.
“We see a shortage, we feel it. But the impact on many of our clients is not so great, “Hon Hai Chairman Young Liu told reporters in Taipei.” For some customers with better orders than expected, then there is some impact. For large customers who plan well, where there is no big bang for orders, those customers do well. ”
Koh said Samsung could decide not to launch its Galaxy Note during the second half of 2021, violating the age-old line of annual market launch. The Note Series has delivered about 5% of Samsung smartphone exports over the past two years, the IDC estimates, but it claims a significant amount of money because it is one of the best on the list.
He said: “The Note series has been set as a prime example in our business portfolio.”