GM Followed by Apple and Sony... "Semiconductor Prices Jump 15%"

Increased Semiconductor Demand Amid 5G and Internet Boom
Global Expansion Beyond Cars to Phones and Game Consoles
Short-Term Supply Facility Expansion Challenging

[Asia Economy Reporter Minyoung Cha] A global semiconductor shortage is expected to impact not only the automotive industry but also the smartphone and gaming console industries. Since the outbreak of COVID-19, demand for 5G trends and IT devices has surged, but the supply increase has not kept pace. It is anticipated that the automotive and transportation industries, which are relatively disadvantaged in terms of profitability, will suffer significant damage.

On the 7th (local time), US Bloomberg reported that Apple is currently experiencing difficulties in selling some high-end iPhones due to parts shortages. The iPhone 12 series, Apple's first 5G smartphone, is a representative example.

Nintendo, Sony, and Microsoft, which manufacture home console gaming devices, are also struggling to adequately meet demand for similar reasons. Sony announced on the 3rd that it is expected to have difficulty meeting the demand for new consoles such as Nintendo's this year.

The automotive and transportation industries, which are at a disadvantage compared to the high-profit smartphone and gaming industries, are in a more serious state. Automakers such as General Motors (GM) and Ford in the US have already begun production cuts at three North American plants due to semiconductor shortages. Ford is also preparing for a short-term 20% decline. The estimated loss in automobile sales due to semiconductor shortages is $61 billion (approximately 68.32 trillion KRW).

Bloomberg pointed out that the semiconductor shortage has worsened as demand for IT devices such as computers, which sharply declined at the beginning of the COVID-19 crisis, has recovered. The automotive industry is also criticized for failing to properly respond to the current semiconductor shortage situation, having been mired in shortsighted measures without anticipating the post-COVID demand rebound.

Additionally, it analyzed that China's stockpiling movements amid conflicts with the US are making the situation more difficult. In fact, Chinese companies such as Huawei, which are subject to US semiconductor sanctions, have increased chip inventories, and China's semiconductor imports for computers last year rose 14% year-on-year to $380 billion.

Since the end of last year, semiconductor prices have also been on the rise. Neil Moston, an analyst at Strategy Analytics, said, "Due to the virus, social distancing within factories, and fierce competition with tablet PCs, laptops, and electric vehicles, the supply of smartphone parts is facing one of the most difficult situations in years." Neil Moston estimated that prices for key smartphone components such as chipsets and displays have risen about 15% over the past 3 to 6 months.

The problem is that, for the time being, supply is insufficient to keep up with the increased demand. The world's largest semiconductor company Qualcomm outsources production to only two major companies: Taiwan's TSMC and South Korea's Samsung Electronics. The concentration of supply is also increasing. Bloomberg indicated the difficulty of resolving the issue, stating, "It takes years and costs tens of billions of dollars to expand supply capacity at these two companies."

This content was produced with the assistance of AI translation services.