Samsung Electronics Co. warned that it faces the consequences of a “serious imbalance” of semiconductors worldwide, becoming the largest technology giant to express its concerns about the shortage of chips that extends beyond the automotive industry.
Samsung, one of the world’s largest chip and consumer electronics makers, expects the crisis to be a problem for its business next quarter, co-CEO Koh Dong-jin said at an annual shareholders’ meeting in Seoul. The company is also considering omitting the introduction of a new Galaxy Note, one of its best-selling models, this year, though Koh said it was geared towards streamlining its range.
SEE: Samsung Electronics Co. he warned of a “serious” imbalance in the semiconductor industry and said he might have to delay the introduction of one of its key smartphones.
Industry giants Continental AG a Renesas Electronics Corp. i Innolux Corp. has warned in recent weeks of longer-than-expected deficits thanks to unprecedented demand from the Covid era, from cars to game consoles and mobile devices. Samsung, the world’s largest smartphone maker, is working with overseas partners to resolve the imbalance and avoid possible setbacks to its business, according to its co-CEO.
Shares of Samsung fell to 1% on Wednesday in Seoul, while several Asian chip suppliers and manufacturers, including Taiwan Semiconductor Manufacturing Co. i SK Hynix Inc. too he fell. The Note series has contributed about 5% of Samsung’s smartphone shipments over the past two years, according to IDC, but it accounts for a larger share of revenue because it’s one of the most expensive in the range.
“If Samsung talks publicly about future products, you already know that the silicon crisis is serious,” said Avi Greengart, an analyst and founder of consulting firm Techsponential.
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Chip manufacturers such as Samsung and TSMC is at the forefront of a global effort to address the supply shortage of chips, the basic components of a large number of consumer devices. The deficit has shut down car plants around the world and now jeopardizes the supply of other products.
As a result of rising demand, Samsung’s semiconductor factory in Austin, Texas, was on the sidelines of February due to power outages across the state and has not resumed full production. The resulting deficit in the production of Qualcomm Inc. 5G Radio Frequency Chips could reduce global smartphone production by 5% in the second quarter, according to research company Trendforce. He interruption it is likely to affect Samsung’s mid-range phones and laptops more than its high-end server models or chips, said Greg Roh, senior vice president of HMC Securities.
“There is a serious imbalance in the supply and demand of chips in the IT sector globally,” 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 is difficult to say that the problem of scarcity has been solved 100% ”.
Read more: Chip shortage spirals beyond cars to phones and consoles
Factory manufacturers received the first blow in part due to poor inventory planning and $ 61 billion in sales is expected to be lost this year alone. Honda Motor Co. Wednesday he said he will temporarily suspend production next week on most plants in the United States and Canada, highlighting the deep crisis.
Some analysts say the shortage could be solved mostly in the coming months. But the concern is that tight supply in certain segments, such as in more mature semiconductors, where time is needed to build capacity, could end up reducing the consumer electronics industry and raising prices if it persists. Semiconductors are close to Washington’s first official agendas in Brussels.
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Crisis mode
Automotive industry could lose $ 61 billion in 2021 in sales due to chip shortage
Source: AlixPartners. Estimates based on the current rate of volume losses.
On Tuesday, Hon Hai Precision Industry Co., the assembler of most of the world’s iPhones, joined a chorus of industry executives who stressed that it will take time to resolve the imbalances in demand and supply.
“It simply came to our notice then feel that. But the impact for most of our customers is not so great, “Hon Hai President Young Liu told reporters in Taipei.” For certain customers who have better orders than expected, there are a certain impact. For the main customers that plan well, where there is no significant increase of the orders, these customers go well ”.
Koh said Samsung could decide not to introduce its Galaxy Note during the second half of 2021, breaking a streak of annual canopy line launches for years.
“The Note Series stands as a high-end model in our business portfolio,” he said. “It could be a burden to reveal two star models in a year, so it can be difficult to launch the Note model in 2H. It may change the timing of the launch of the Note model, but we are trying to launch a Note model next year.”
– With the assistance of Debby Wu, Vlad Savov and Abhishek Vishnoi
(Updates with analysts’ comments from the fourth paragraph)