Samsung Again Warns About Chip Shortage

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Global silicon shortage not just impacting the car industry, as Samsung warns it may delay launch of the new Galaxy Note device

The global shortage of semiconductor chips has caused Samsung once again to issue a blunt warning to the market.

Samsung of course is one of the biggest chip makers in the world, but it has warned of a “serious imbalance” in the semiconductor industry, as global shortages cause disruption, the BBC reported.

And Samsung also warned that it might skip the launch of the next Galaxy Note smartphone, to streamline its smartphone lineup.

Phone warning

“There’s a serious imbalance in supply and demand of chips in the IT sector globally,” Samsung’s co-chief executive and mobile chief, Koh Dong-jin, was reported as saying at a shareholder meeting.

“It is hard to say the shortage issue has been solved 100%,” Koh said, but added that Samsung was working with overseas partners to meet demand.

Samsung already launched the Galaxy S21 in January, but Koh reportedly signaled that the new Galaxy Note smartphone may now be delayed until 2022.

Samsung's Galaxy S21 Ultra
Samsung’s Galaxy S21 Ultra

As a high-end model, “it might be difficult to release”, he reportedly said. “It could be a burden to unveil two flagship models in a year.”

This is not the first time Samsung has warned about the lack of semiconductor chips.

In late January Samsung memory chip business executive vice president Han Jinman warned that the global shortage in semiconductors for cars could have a knock-on effect on the memory chips used in smartphones.

Indeed, the car industry has been warning for a while now about the silicon shortage. Earlier this month General Motors confirmed it would again extend production cuts at three North American plants, and added a fourth to the list of factories hit.

It comes after GM last month extended its production cuts at three North American factories.

Meanwhile rival car group Stellantis which was formed by the merger of Fiat Chrysler and Groupe PSA (brands include Alfa Romeo, Chrysler, Citroën, Dodge, Fiat, Jeep, Opel, Peugeot and Vauxhall), also admitted the pain caused by the chip shortage could linger far into this year.

Global shortage

The US government has become increasingly alarmed at the global chip shortages that has forced car makers and other manufacturers to limit production.

US President Joe Biden signed an executive order on 24 February to tackle a number of pressing shortages for four critical products, such as semiconductor chips, electric vehicle batteries and rare earth minerals.

President Biden also announced he would seek $37 billion in funding to supercharge chip manufacturing in the United States.

German car maker VW in January publicly blamed poor planning by chip makers as the principle reason for most car brands around the world have had to to reduce factory production.

Audi (part of the Volkswagen group) also warned it was having to slow production because of the chip shortage, forcing it to make 10,000 fewer cars in the first quarter of the year and putting more than 10,000 workers on furlough.

Daimler (which makes Mercedes), Fiat, Honda, Ford, Nissan, Subaru and Toyota all reportedly have had to suspend production for days or weeks at a time.

That said, Toyota and Hyundai are less impacted by the chip shortage as they both managed to stockpile chips ahead of the shortage.

Mazda also warned it would cut its global output by 7,000 vehicles in February and March.

Ford meanwhile warned the chip shortage could lead to a 10 to 20 percent loss in first-quarter production, which could impact profits by as much as $2.5 billion.

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Author: Tom Jowitt
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