"It's a perfect storm," he said on the sidelines
of the Appliance and World Electronics Expo.
"On the one hand we have to satisfy domestic demand for
appliances, on the other hand we're facing an explosion of export orders. As
far as chips go, for those of us in China, it was inevitable."
The company has struggled to secure enough microcontrollers,
simple processors that power over half of its products including microwaves,
refrigerators, and washing machines.
While the chip shortage has affected a range of high-end
suppliers like Qualcomm Inc, it originated and remains most severe for mature
technologies, for example power-management chips used in cars.
The chip shortage, which began in earnest in late December,
was caused in part as automakers miscalculated demand and pandemic-fuelled
sales of smartphones and laptops surged. It forced carmakers including General
Motors to cut production, and increased costs for smartphone makers such as
Xiaomi Corp.
And with every company that uses chips in its products panic
buying to shore up its stockpile, the shortage has blindsided not just
Whirlpool but other appliance makers too.
Hangzhou Robam Appliances Co Ltd, a Chinese white goods
maker with over 26,000 employees, had to delay the release of a new high-end
stove vent by four months because it couldn't source enough microcontrollers.
"Most of our products are already optimised for smart
home use, so of course we need a lot of chips," said Dan Ye, marketing
director at Robam.
He added that the company had found it easier to source
chips from China than overseas, prompting it to re-evaluate future supplies.
"The chips we use in our products aren't the most
cutting edge. Domestic chips can satisfy our needs completely."
Already cutthroat, profit margins at white goods firms are
getting further squeezed due to the shortage.
Robin Rao, planning department director of China's Sichuan
Changhong Electric Co Ltd, said lengthy replacement cycles for appliances,
coupled with intense competition and a slowing real estate market, have long
kept profit margins thin.
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