Semiconductor Shortage Even Slows Apple... Samsung Says "Cannot Predict When It Will End"

[Asia Economy Reporter Seulgina Cho] "It is impossible to predict when this will end."

The semiconductor supply shortage is prolonging longer than expected, raising concerns among smartphone manufacturers. Despite the strong sales of new smartphones, companies are forced to reduce production. Apple also faced setbacks in the third quarter, falling short of expectations due to the semiconductor supply shortage.

According to industry sources on the 31st, market research firm Counterpoint Research has lowered its global smartphone shipment forecast for this year from 1.45 billion units to 1.41 billion units. This is based on the observation that most smartphone companies will face difficulties launching products in the second half of the year due to parts shortages. Another market research firm, Canalys, announced that global smartphone shipments in the third quarter decreased by 6% year-on-year due to parts shortages.

Samsung Electronics and Apple are struggling to supply sufficient quantities despite the popularity of new smartphones such as the Galaxy Z Flip3 and iPhone 13 series launched in the second half of the year, with some models running out of stock. Bloomberg reported that "Apple is considering reducing production of the iPhone 13 series by 10 million units." Apple reportedly failed to secure enough semiconductors from suppliers like Broadcom due to production disruptions caused by the spread of COVID-19.

Samsung Electronics has yet to finalize the release schedule for its new product, the Galaxy S21 Fan Edition (FE), which was originally planned to be launched last month. Following the cancellation of the launch event due to semiconductor supply issues, the product release itself is under reconsideration. Other companies such as Google, Huawei, and Sony, which have recently unveiled new products, are also not immune to this semiconductor shortage crisis.

This is due to difficulties in securing application processors (APs), which serve as the brain of smartphones, caused by the semiconductor shortage. Manufacturers are visibly concerned as the supply shortage prolongs up to the critical period of the year-end shopping season, including Black Friday and Christmas, when they need to aggressively compete for market share by launching new products.

Samsung Electronics, which announced its earnings last week, expects this supply shortage to continue for a considerable period. During its earnings conference call, Samsung stated, "The semiconductor parts supply issue significantly impacted third-quarter sales," adding, "It is difficult to predict when this will be resolved." They further said, "We will optimize supply timing through cooperation with partners" and "We will efficiently rebalance parts supply to minimize the impact."

Apple, known for its robust global supply chain, was also unable to avoid the fallout from the semiconductor shortage. Apple CEO Tim Cook expressed concern after announcing third-quarter (Apple’s fiscal fourth quarter) results, stating, "The shortage of semiconductor parts is ongoing," and "It is unclear how long this will last." Third-quarter revenue was $83.4 billion, a 29% increase year-on-year, but fell short of market expectations of $85 billion. Due to parts supply disruptions, iPhone revenue was $39.97 billion, significantly below the market forecast of $41.51 billion.

According to a recent report released by Counterpoint Research, smartphone inventory levels recorded negative figures for four consecutive months from May to August. This indicates that supply is insufficient compared to market demand. Furthermore, it is estimated that in September and October, major smartphone companies’ inventory levels will hit their lowest points due to the semiconductor supply shortage.

Yoon Jeong Lee, an analyst at Counterpoint Research, said, "Since inventory levels are currently at their lowest, it seems unlikely that there will be large-scale smartphone discount promotions during this year’s year-end shopping season as in previous years," adding, "It will be difficult to resolve the supply shortages of key components such as APs, power management ICs (PMICs), and display driver ICs (DDIs) in the short term."

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