According to online sources, the global shortage of semiconductor products has begun to have a negative impact on the smartphone industry. Deliveries are slowing and buyers are seeing significant price increases for the first time in years. Some manufacturers have had to cut production and delay the launch of new devices.
For most of the year, smartphone makers have avoided the problems faced by car, computer and consumer electronics companies due to chip shortages. This is due to the fact that large smartphone manufacturers usually buy components for six months in advance; but now the time has come when these stocks are coming to an end.
For Samsung, the world’s largest smartphone maker, the chip shortage caused shipments to decline by 20% from the previous quarter, the source said. Google announced that the new Pixel 5a 5G smartphones will only be available in the US and Japan markets; while previous Pixel models have been available in more countries. The Chinese Xiaomi has raised the price of the Redmi Note 10 sold in India; by about 8% relative to the price at the time of the device’s launch. In April, Xiaomi introduced the Mi 11 Ultra smartphone in India; but sales were delayed and the smartphone hit retail only this month.
The source notes that semiconductor shortage problems are unevenly spread across the smartphone industry. According to analysts, Apple; which accounts for about one-sixth of the 1.3 billion smartphones sold annually; has managed to avoid problems through its influence on supply chains. The same goes for many premium Samsung smartphones. However, more than 80% of the smartphone industry remains stranded by chip shortages.
The global chip shortage has reached smartphone manufacturers
According to Counterpoint Research, global smartphone shipments in the first three months of 2021 grew 20% over the same period in 2020 and 4% over the first quarter of 2019. The industry seems to have been targeting a successful year; as the coronavirus vaccine release began and people, sensing the imminent end of a period of restrictions; started spending money again. In the period from April to July last year, smartphone shipments fell as much as possible; mainly due to the fact that severe restrictive measures were introduced in many countries due to the pandemic.
Counterpoint estimates that global smartphone shipments in the second quarter will decline 10% from the first quarter. Despite this, they expect that smartphone shipments in the third and fourth quarters will be more stable than in the same periods in 2019 and 2020. Counterpoint analysts estimate that smartphone makers will ship 771 million devices to the market in the second half of this year; up 1.3% from the 761 million devices that were shipped in the second half of last year. The increase in the prices of components due to the lack of chips is currently compensated by manufacturers by the increase in prices for devices. According to researchers, the average wholesale price of smartphones worldwide increased by 5% in the second quarter.
We can see the supply shortfall in the smartphone segment in the quarterly financials of Taiwan Semiconductor Manufacturing Co., the world’s largest contract chipmaker. TSMC’s total sales were up 20% year-over-year, but the company’s smartphone chip revenue was down 3%.