Will the Microchip Shortage Effect the Cell Phone Industry?
There is a global shortage of semiconductor chips. We suggest that, if you need a new mobile device, you should purchase it sooner rather than later. Prices moving forward are difficult to predict. We want to help you and your smartphone be safe and fully operational.
So far, automobiles and video game consoles have felt the impact of the global microchip shortage. Next on the list are smartphones. Smartphones have not been affected up to this point, because large smartphone manufacturers like Apple and Samsung have utilized their stockpile of critical components.
The Ultimate Impact on Apple, Samsung, and Others
Recently CEOs like Tim Cook of Apple have warned that these supply constraints could affect sales of iPhones and iPads. But their attention to their supply chain has allowed them to keep pace.
Smartphone manufacturers run at a different pace than the automotive industry, and smartphones sell at a much higher rate. Smartphone manufacturers have long anticipated and made moves to address the shortage. Additionally, the automotive industry began to drop their demand for semiconductors, anticipating the drop in demand for cars during the pandemic.
Smartphone manufacturers actually benefited from the available semiconductors left by the automotive industry, who then really felt the pain, as demand for cars rose faster than expected. The demand for smartphones did wane in 2020 at the height of the pandemic. Sales declined 12.5%. Since then, Global Smartphone sales have risen to 26%.
Between the closure of several factories and an ever-increasing demand for consumer electronics, semiconductors are now in short supply. So now, Smartphone manufacturers are starting to feel the impact of the shortage.
Who Gets Hurt?
Apple: Sales of iPhones and iPads will be affected, reports Apple CEO Tim Cook. Although Apple is one of the top priorities for chipmakers, it is vulnerable like everyone else. Instead of the high-end chip production, like CPUs, being affected, supporting chips that perform more everyday functions are affected. Without them, even the iPhone is all but useless.
Samsung: Samsung also benefits from its size and position in the market, however, remains in perilous territory. After a month-long shutdown of its semiconductor fabrication plant in Austin, and its Vietnam factories suspending operation because of COVID. Samsung suffered a serious imbalance in supply and demand. They also mentioned that their forecasted recovery to pre-pandemic levels might still be at risk.
Smaller manufacturers: China’s Lenovo and TCL, and also Finland’s HMD Global are likely to struggle with supply even more. There is overall tightness in the supply chain, and there might be an imbalance across the market.
The Consumer: The road ahead looks as though shortages will likely continue, at least short term, and result in limited availability of new phones and possibly higher prices.
Certainly, the pandemic is one of the leading causes of the shortage, but it can also be attributed to China shutting off power to some manufacturing areas for emissions issues.
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