Samsung Electronics’ foundry in Austin, Texas, responsible for manufacturing 5G devices, display and logic, is unlikely to reach peak production until the end of the month, reports research firm TrendForce. The factory’s S2 line is responsible for manufacturing these products, and due to the volume of components shipped, TrendForce estimates the drop in production will cut global smartphone production by 2% in the second quarter of this year.
Samsung’s Austin Drop production drops to cut 5G smartphone by a third in next quarter, research firm finds
TrendForce estimates that a third of the production of the S2 line is for Qualcomm’s Front-end Radio components for fifth-generation (5G) smartphones, and as a result, these devices will experience a 30% drop in production over the course of the year. next quarter. Still, given the larger share of 4G smartphones in overall global production and given that device makers are expected to increase production of their 4G devices in response to the shortage of 5G components, TrendFroce estimates that overall production of handsets will not decrease by more than 5% in the next quarter.
After 5G components, a fifth of the S2 line’s release is for display components, including those used by Apple Inc for its latest iPhones. However, given that Apple plans to withdraw one of the four smartphones launched last year and its peak sales season is over, the shortage is unlikely to affect the release of the tech giant’s smartphones. Cupertino.
In a previous exclusive, Reuters reported that modems sold by Qualcomm were in short supply due to production issues Samsung faced and that a manufacturer under contract for major smartphone brands had confirmed it was facing a shortage of components from Qualcomm, which would cut its handset shipments for this year.
When combined, Qualcomm’s Snapdragon X50 baseband (bottom right) and QTM052 mmWave transceiver allow a gadget to achieve 5G connectivity. (Image credit: Qualcomm)
The smartphone marker shortage follows a similar situation experienced by automakers. Following the post-pandemic economic recovery in China, automakers have been forced to increase their chip orders for auto chips after cutting them earlier to lower procurement costs. However, due to the capacity of processing nodes filled by orders from other segments, companies were unable to source silicon products in sufficient quantities to maintain continuous production – an event that forced major US automakers to stop production.
A winter power outage in Texas that is causing the current chip problems and causing suffering to thousands of residents has also created doubt in Samsung’s mind for a new chip factory in the United States. The company plans to produce semiconductors fabricated via the 3nm process node with this facility and is currently negotiating with Texas officials for tax breaks of nearly US $ 1 billion over 20 years.
Samsung’s contract chip manufacturing rival, the Taiwan Semiconductor Manufacturing Company (TSMC), is also planning to build a US chip factory in Arizona. TSMC has already allocated funds for this and expects the plant to be operational in a few years.
To reduce the impact of the production disruption on the global smartphone market, TrendForce believes that Samsung will prioritize production of 5G components first once the S2 line is fully brought back online. The current disruption is due to Samsung’s decision to suspend wafer inputs into the line, with 90% capacity utilization not expected before the end of March. Capacity utilization is a term used to refer to the result of a process divided by its capacity by those responsible for operations.
