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Samsung Electronics Co. has warned it is grappling with the fallout from a “serious imbalance” in semiconductors globally, becoming the biggest tech giant to voice concerns over chip shortages spreading beyond the automotive industry.
Samsung, one of the world’s largest manufacturers of chips and consumer electronics, expects the crisis to pose a problem for its business in the next quarter, co-chief executive Koh Dong-jin said at the meeting. ” an annual meeting of shareholders in Seoul. The company is also planning to skip the introduction of a new Galaxy Note – one of its best-selling models – this year, although Koh has said this is aimed at streamlining its lineup.
industry giantsContinental AG atRenesas Electronics Corp. andInnolux Corp. has warned in recent weeks of longer-than-expected deficits thanks to the Covid-era’s unprecedented demand for everything from cars to game consoles and mobile devices.Volkswagen AG said this week that it had lost production of around 100,000 cars worldwide. In North America, silicon shortages and extreme weather conditions have combined to increase production atToyota Motor Corp. andHonda Motor Co. The fear is that the tightening, which initially hit automakers hard, could now disrupt the much larger electronics industry.
“There is a serious imbalance between supply and demand for chips in the computing industry globally,” said Koh, who oversees the company’s IT and mobile divisions. “Despite the difficult environment, our business leaders are meeting with partners abroad to resolve these issues. It is difficult to say that the shortage problem has been solved 100%.
Read more:Chip shortages spirals beyond cars to phones and consoles
Samsung, the world’s largest smartphone maker, is working with overseas partners to resolve the imbalance and avoid potential setbacks to its business, its co-CEO said. His actionsslipped 0.6% in Seoul on Wednesday, while Asian chipmakers and suppliers includingTaiwan Semiconductor Manufacturing Co. andSK Hynix Inc. alsotear down.
Chipmakers like Samsung andTSMC is at the forefront of a global effort to fill a shortage of semiconductors, the building blocks of a plethora of consumer gadgets. The deficit has closed auto factories around the world and now threatens the supply of other products. While the Korean company is the first bespoke silicon maker after TSMC, it relies on external vendors and manufacturers for some parts like power management and radio chips.
The higher than expected demand for smartphones in the Covid era has also stretched stores fromQualcomm Inc.’s Snapdragon chips, the go-to processors for mobile devices. Qualcomm designs the chips, known as application processors, but relies on Samsung and TSMC to produce them and the Taiwanese chipmaker’s capacity has been strained.
“The limited supply of Qualcomm AP chips produced byTSMC affects everyone exceptApple, ”said MS Hwang, analyst at Samsung Securities. “PCs will soon be affected due to the shortage of display driver ICs, and television profitability will be affected by soaring LCD panel prices.” “
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To make matters worse, Samsung’s own production was cut back last month. Its plant in Austin, Texas – which manufactures chips for both internal and external consumption – wassidelined in February by statewide power outages and has not resumed full production. The resulting Qualcomm 5G radio frequency chip production shortfall could reduce global smartphone production by 5% in the second quarter, estimates research firm Trendforce. But the breakdown this is likely to affect Samsung’s mid-range phones and laptops more than its high-end models or server chips, said Greg Roh, senior vice president at HMC Securities.
“If Samsung talks publicly about future products, you know the silicon crisis is serious,” said Avi Greengart, analyst and founder of consulting firm Techsponential.
Automakers were the first affected by the chip tightening in part due to poor inventory planning and are expected to miss $ 61 billion in sales this year alone.Honda Motor Co. Wednesdaysaid it would temporarily halt some production next week at a majority of US and Canadian factories, pointing to the worsening crisis.
Some analysts say the shortages could be largely ironed out in the coming months. But the concern is that tight supply in some segments – such as in more mature semiconductors where it takes time to build capacity – could potentially strangle the wider consumer electronics industry and increase prices. price if it persists. Semiconductors are now at the top of the official agenda from Washington to Brussels.
At the same time, ChinaThe insatiable appetite for fleas – fueled in part by its rapid recovery from the pandemic – and stockpiling by local businesses are fueling demand. Sales of the country’s chip industry soared 18% to 891.1 billion yuan ($ 137 billion) in 2020, the president of the China Semiconductor Industry Association said on Wednesday. , Zhou Zixue, at a conference in Shanghai.
“The shortage of integrated circuits will be a problem to frustrate the supply chain over the next six months,” said Charles Shum, analyst at Bloomberg Intelligence.
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Tuesday,Hon Hai Precision Industry Co. – the assembler of most of the world’s iPhones – has joined a chorus of industry executives stressing that it will take time to resolve imbalances between demand and supply.
“We see a shortage, we Feel he. But the impact for most of our customers is not that big, ”Hon Hai Chairman Young Liu told reporters in Taipei. “For some customers who have orders that are better than expected, then there is some impact. For large clients who plan well, where there is no large increase in orders, these clients are doing well.
Koh said Samsung may decide not to introduce its Galaxy Note in the second half of 2021, breaking a series of years of annual launches for the branded line. The Note series has contributed around 5% of Samsung smartphone shipments over the past two years, IDC estimates, but accounts for a larger share of revenue because it is one of the more expensive in the line.
“The Note series is positioned as a top 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 the Note model in 2 hours. The timing of the Note model launch can be changed, but we are looking to release a Note model next year.
– With the help of Debby Wu, Vlad Savov, Abhishek Vishnoi and Yuan Gao
(Updates with analyst comments and details on third paragraph reductions)