Samsung Electronics Co. warned that it is grappling with the consequences of a “severe imbalance” in semiconductors worldwide, becoming the largest tech giant to express concern about the shortage of chips spreading beyond the automotive industry.
Samsung, one of the world’s largest chip and consumer electronics manufacturers, expects the crisis to be a problem for its company next quarter, co-CEO Koh Dong-jin said at an annual shareholders’ meeting in Seoul. The company is also considering skipping the launch of a new Galaxy Note – one of its best-selling models – this year, although Koh said it was aimed at streamlining its lineup.
WATCH: Samsung Electronics Co. warned of a “serious” imbalance in the semiconductor industry, saying it should delay the introduction of one of its major smartphones.
Industry giants Continental AG to Renesas Electronics Corp. and Innolux Corp. has warned of longer-than-expected shortages in recent weeks thanks to unprecedented Covid-era demand for everything from cars to games consoles and mobile devices. Samsung, the world’s largest smartphone maker, is working with foreign partners to resolve the imbalance and avoid potential setbacks for its company, according to its co-CEO.
Shares of Samsung fell a whopping 1% in Seoul on Wednesday, with several suppliers and Asian chip makers including Taiwan Semiconductor Manufacturing Co. and SK Hynix Inc. also fell. The Note series contributed about 5% to Samsung’s smartphone shipments in the past two years, IDC estimates, but accounts for a higher share of the revenue because it is one of the most expensive in the range.
“When Samsung talks publicly about future products, you know the silicon crisis is serious,” said Avi Greengart, analyst and founder of consulting firm Techsponential.
The world is short of computer chips. This is why: QuickTake
Chip makers such as Samsung and TSMC is at the forefront of a global effort to close a shortage of chips, the building blocks of a plethora of consumer gadgets. The shortage has shut down car factories around the world and now threatens the supply of other products.
To add to the rising demand, Samsung’s semiconductor plant was in Austin, Texas Sidelined in February due to statewide power outages and full production has not resumed. The resulting shortage in the production of 5G radio frequency chips from Qualcomm Inc. global smartphone output could decrease by 5% in the second quarter, research firm Trendforce estimates. The failure According to Greg Roh, a senior vice president at HMC Securities, the mid-range phones and laptops are likely to impact more than the top models or server chips.
“There is a serious imbalance in the supply and demand of chips in the IT sector worldwide,” said Koh, who oversees the company’s IT and mobile divisions. “Despite the difficult environment, our business leaders meet with partners abroad to solve these problems. It’s hard to say that the shortage problem is 100% resolved. “
Read more: Chip shortage extends beyond cars to phones and consoles
Automakers were the first to be hit in part due to poor inventory planning and are expected to lose $ 61 billion in sales this year alone. Honda Motor Co. on Wednesday said it will temporarily suspend some production in a majority of its plants in the US and Canada next week, underscoring the deeper crisis.
Some analysts say The shortages can be largely eliminated in the coming months. But the concern is that tight supply in certain segments – such as in more mature semiconductors where it takes time to build capacity – could ultimately slow down the broader consumer electronics industry and drive prices up if it persists. Semiconductors are now almost at the top of official agendas from Washington to Brussels.
See, car makers, the shortage of chips is not personal: Tim Culpan
Crisis mode
The automotive industry could lose $ 61 billion in revenue by 2021 due to a shortage of chips
Source: AlixPartners. Estimates based on the current rate of volume loss.
On Tuesday, Hon Hai Precision Industry Co. – the assembler of most iPhones in the world – joined a chorus of industry executives and stressed that it will take time to resolve supply and demand imbalances.
‘We see a shortage, we to feel it. But the impact for most of our customers is not that great, ”Hon Hai chairman Young Liu told reporters in Taipei. “For certain customers who have better than expected orders, there is some impact. For large customers who plan well and where there is no major increase in orders, those customers are doing fine. “
Koh said Samsung could decide not to launch its Galaxy Note in the second half of 2021, breaking a long string of annual launches for the tent line.
“The banknote series is positioned as a high-end model in our business portfolio,” he said. “It could be a burden to unveil two flagship models within a year, so it can be difficult to release the Note model in 2H. The timing of the Note model’s launch is subject to change, but we are aiming to release a Note model next year. “
– With help from Debby Wu, Vlad Savov and Abhishek Vishnoi
Updates with analyst comments from the fourth paragraph