Samsung, one of the world’s largest makers of chips and
consumer electronics, expects the crunch to pose a problem to its business next
quarter, co-Chief Executive Officer Koh Dong-jin said during an annual
shareholders meeting in Seoul.
The company is also considering skipping the introduction of
a new Galaxy Note -- one of its best-selling models -- this year, though Koh
said that was geared toward streamlining its lineup.
Industry giants from Continental AG to Renesas Electronics
Corp. and Innolux Corp. have in recent weeks warned of longer-than-anticipated
deficits thanks to unprecedented Covid-era demand for everything 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 avert
potential setbacks to its business, according to its co-CEO.
Samsung’s shares slid as much as 1% in Seoul on Wednesday,
while several suppliers and Asian chipmakers including Taiwan Semiconductor
Manufacturing Co. and SK Hynix Inc. also fell. The Note series contributed
roughly 5% of Samsung’s smartphone shipments over the past two years, IDC
estimates, but accounts for a more significant chunk of revenue because it’s one
of the priciest in the lineup.
“If Samsung is publicly talking about future products, you
know that the silicon crunch is serious,” said Avi Greengart, analyst and
founder of consultancy Techsponential.
The World Is Short of Computer Chips. Here’s Why: QuickTake
Chipmakers like Samsung and TSMC are at the forefront of a
global effort to plug a shortfall in supply of chips, the building blocks of a
plethora of consumer gadgets. The deficit has closed auto plants around the
world and now threatens supply of other products.
Compounding the demand surge, Samsung’s semiconductor fab in
Austin, Texas was sidelined in February by statewide power outages and hasn’t
resumed full production. The resulting shortfall in production of Qualcomm Inc.
5G radio frequency chips could reduce global smartphone output by 5% in the
second quarter, research firm Trendforce estimates. The outage there is likely
to affect Samsung’s mid-tier phones and laptops more than its top-of-the-range
models or server chips, said Greg Roh, a senior vice president at HMC
Securities.
“There’s a serious imbalance in 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 are meeting
partners overseas to solve these problems. It’s hard to say the shortage issue
has been solved 100%.”
Carmakers got hit first in part because of poor inventory
planning and are expected to miss out on $61 billion of sales this year alone.
Honda Motor Co. on Wednesday said it will temporarily suspend some production
next week at a majority of U.S. and Canada plants, underscoring the deepening
crisis.
Some analysts say shortages could get mostly ironed out in
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
eventually throttle the broader consumer electronics industry and jack up prices
if it persists. Semiconductors are now near the top of official agendas from
Washington to Brussels.
See, Carmakers, the Chip Shortage Isn’t Personal: Tim Culpan
On Tuesday, Hon Hai Precision Industry Co. -- the assembler
of most of the world’s iPhones -- joined a chorus of industry executives
stressing it’ll take time to resolve imbalances in demand and supply.
“We see a shortage, we feel it. But the impact for most of
our customers is not that big,” Hon Hai Chairman Young Liu told reporters in
Taipei. “For certain customers that have better than expected orders, then
there’s some impact. For major customers that plan well, where there’s no big
surge on orders, those customers are doing fine.”
Koh said Samsung may decide not to introduce its Galaxy Note
during 2021’s second half, breaking a years-long streak of annual launches for
the marquee line.
“Note series is positioned as a high-end model in our
business portfolio,” he said. “It could be a burden to unveil two flagship
models in a year so it might be difficult to release Note model in 2H. The
timing of Note model launch can be changed but we seek to release a Note model
next year.” - Bloomberg
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