Samsung Electronics Co. has warned that it is facing the consequences of a “serious imbalance” in semiconductors globally, becoming the largest technology giant to express concerns about the lack of chips that is spreading beyond the automotive industry.
Samsung, one of the world’s largest producers of chips and consumer electronics, expects the crisis to put a strain on its business in the next quarter, co-CEO Koh Dong-jin said at an annual meeting of shareholders in Seoul. The company also plans to drop the introduction of a new Galaxy Note – one of the best-selling models – this year, although Koh said it is geared towards streamlining its range.
Look: Samsung Electronics Co. warned of a “serious” imbalance in the semiconductor industry and said it may be necessary to delay the introduction of one of its key smartphones.
Industry giants from Continental AG to Renesas Electronics Corp. and Innolux Corp. has warned in recent weeks of longer-than-anticipated deficits due 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 foreign partners to resolve the imbalance and prevent possible failures in its business, according to its co-CEO.
Samsung shares fell to 1% in Seoul on Wednesday, while several Asian chip suppliers and manufacturers, including Taiwan Semiconductor Manufacturing Co. and SK Hynix Inc. as well fell. The Note series has contributed about 5% of Samsung smartphone deliveries over the past two years, IDC estimates, but is a more significant part of revenue, as it is one of the most valuable in the range.
“If Samsung is talking publicly about future products, you know the silicon crisis is serious,” said Avi Greengart, an analyst and founder of Techsponential Consulting.
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Chip manufacturers such as Samsung and TSMC is at the forefront of the global effort to eliminate the chip supply gap, which is a plethora of consumer gadgets. The deficit has shut down car factories around the world and now threatens to supply other products.
Composing the growing demand, the Samsung semiconductor factory in Austin, Texas was abandoned in February by national power outages and did not resume full production. The resulting deficit in the production of Qualcomm Inc. Radio Frequency Chips 5G could reduce global smartphone production by 5% in the second quarter, research firm Trendforce estimates. pause it is likely to affect Samsung’s mid-range phones and laptops more than its top models or server chips, said Greg Roh, senior vice president at HMC Securities.
“There is a serious imbalance in the demand and supply of chips in the global IT sector,” said Koh, who oversees the company’s IT and mobile divisions. “Despite the difficult environment, our business leaders meet with foreign partners to solve these problems. It is difficult to say that the problem of scarcity has been solved 100%. ”
Read more: Spirals lack chips beyond cars to phones and consoles
Car manufacturers have been hit in the first place in part because of poor inventory planning and are expected to miss $ 61 billion in sales this year alone. Honda Motor Co. Wednesday said it would temporarily suspend some production next week at most factories in the US and Canada, stressing the deepening crisis.
some analysts say the deficit could be largely eliminated in the coming months. But the concern is that limited supply in certain segments – such as in more mature semiconductors, where it takes time to build capacity – could eventually strangle the wider consumer electronics industry and drive up prices if it persists. . Semiconductors are now close to the top of the official agenda from Washington to Brussels.
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Crisis mode
The auto industry could lose $ 61 billion in 2021 sales due to a lack of chips
Source: AlixPartners. Estimates based on the current rate of volume losses.
Tuesday, Hon Hai Precision Industry Co. – the assembler of most iPhones in the world – has joined a chorus of industry executives, stressing that it will take time to resolve imbalances in supply and demand.
“It simply came to our notice then sense This one. But the impact for most of our customers is not so great, “Hon Hai President Young Liu told reporters in Taipei. “For some customers who have better orders than expected, then there is a certain impact. For major customers who plan well, where there is no large increase in orders, these customers do well.
Koh said that Samsung could decide not to introduce its Galaxy Note in the second half of 2021, interrupting a series of annual launches for the brand line.
“The series of notes is positioned as a high-end model in our business portfolio,” he said. “It could be a burden to unveil two flagship models in one year, so it could be difficult to launch the Note model in 2H. The timing of the launch of the Note can be changed, but we are trying to launch a Note next year. ”
– With the assistance of Debby Wu, Vlad Savov and Abhishek Vishnoi
(Updates to analysts’ comments in the fourth paragraph)