Samsung Mobile estimates the chip shortages are far from over

Samsung does not seem to be too optimistic in regards to the global chip shortages that are still affecting so many industries. South Korean publication The Elec reports that the chip shortages issue was one of the major points of discussion during a Samsung Mobile meeting in early November. Samsung Mobile’s president TM Roh discussed with the company’s senior executives, as well as executives from over 30 major component suppliers and came to the conclusion that the smartphone business will continue to be impacted in 2022 just as it was in 2021.

This year, Samsung was unable to secure enough application processor (AP) supplies due to the chip shortages and the shipping blockages, so production projections could not be met. During the aforementioned company meeting, Samsung’s business division warned that the AP and RF (radio frequency) chip supplies will remain tight up until the second half of 2022, and the company needs to come up with a strategy to secure more chips in order to better meet targets.

Additionally, the business division pointed out that production capacity at all major foundries (including Samsung’s own) will continue to be affected by the shortages. In this regard, Samsung Mobile believes that fabless companies like Qualcomm will focus on supplying products with high margin first. Foundries may further increase service prices in 2022 the same way they did this year. To bypass such price hikes, Samsung Mobile is now seeking to sign annual contracts with the major foundries beforehand. Another measure to mitigate the impact of chip shortages will be to secure chip stocks for four weeks instead of two weeks as it stands now.

The not so optimistic forecast coming from Samsung is mostly aligning with estimates from other big companies like Toshiba that believe the shortages could remain a problem until 2023. Smaller companies might see the shortage effects linger even more.

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