The ongoing global semiconductor chip shortage may continue until the second half of 2022, Samsung estimates. TM Roh, the head of the company’s mobile division, discussed the matter in a recent meeting with its partner firms, The Elec reports. Senior executives from over 30 major smartphone component suppliers attended the meeting last month.
According to the report, the meeting was held to discuss Samsung’s business strategy for 2022. The executives evaluated the company’s plans based on the global economy and industry trends. The current chip situation was expectedly one of the major topics of discussion.
Samsung doesn’t expect the chip situation to improve anytime soon
Like every other smartphone maker, Samsung has also felt the effect of the unprecedented chip shortage this year. All major vendors struggled to meet their sales targets, resulting in slower shipment growth than expected. While some analysts expect the situation to improve in 2022, Samsung isn’t as much optimistic. The Korean behemoth has seemingly told its partners to brace for another year of sluggish growth in the smartphone market.
Samsung expects application processors (AP) and radio frequency (RF) chips to remain short in supply until the second half of next year. Since these are two key components for smartphones, manufacturers would struggle to produce as many units as they’d like. And as the demand for components rises, foundry companies are also likely to increase prices.
However, Samsung has a plan to get around this problem. Of course, the company owns a foundry line so it can produce most components itself. But the Korean conglomerate also relies on firms like TSMC for some components. To that end, it plans to secure long-term contracts with foundries to nullify price fluctuations.
Additionally, Samsung is also looking to stock up to four weeks’ worth of chips going forward. Huawei implemented this strategy to great effect when the US government cut access to its chip suppliers. The beleaguered Chinese company stockpiled the Kirin 9000 chipsets and used them in several smartphone models it launched after that ban came into effect. Samsung now wants to go this route to ensure that it can continue production should supplies get worse. It currently stocks two weeks’ worth of chips.
Now, as they say, it’s easier said than done. So time will tell whether Samsung could put these plans into effect. And whether these measures will help the company weather the storm that this chip shortage is gradually developing into. The Korean giant has quite big ambitions in the smartphone market in 2022 but the company may find it quite hard to achieve those targets.