Global chip shortage: Key Android manufacturer warns of price increase, Apple unaffected
Xiaomi president Wang Xiang has warned that the global chip crisis could cause the company to increase prices of its products. That's because the shortage is putting upward pressure on costs. The Chinese company is currently the third largest manufacturer of smartphones.
The supply crunch can primarily be attributed to the coronavirus. The stay-at-home era caused by pandemic pushed demand for home-networking equipment and consumer electronics beyond estimated levels. This caused some businesses to stockpile, and they now have more inventory than usual. Huawei also began hoarding components around the same time to ensure survival from restrictions imposed by the US. The situation was exacerbated by the February Texas storm which impacted Samsung's operations in Austin.
Qualcomm is also struggling to meet orders and this has already started disrupting the production of Samsung's low and mid-range smartphones. The chaebol has already cautioned that it's dealing with a “serious imbalance” in semiconductors globally. The shortage is reportedly also cramping Snapdragon 888's production.
According to research firm Trendforce, a shortfall in production of Qualcomm's 5G radio frequency chips could reduce smartphone output by 5 percent in the second quarter,
Taiwan Semiconductor Manufacturing Company (TSMC), which makes chips for Apple, has also been impacted but the Cupertino giant has not been affected so far.
We will continue to optimize the costs of our hardware devices, that’s for sure. To be honest, we will do our best to offer the best price we can to consumers. But sometimes, we may have to pass part of the cost increase to the consumer in different cases.
The shortage has not just affected the production of smartphones, but also gaming consoles and the auto sector.
The supply crunch can primarily be attributed to the coronavirus. The stay-at-home era caused by pandemic pushed demand for home-networking equipment and consumer electronics beyond estimated levels. This caused some businesses to stockpile, and they now have more inventory than usual. Huawei also began hoarding components around the same time to ensure survival from restrictions imposed by the US. The situation was exacerbated by the February Texas storm which impacted Samsung's operations in Austin.
The South Korean giant is one of the biggest smartphone chip manufacturers.
Qualcomm is also struggling to meet orders and this has already started disrupting the production of Samsung's low and mid-range smartphones. The chaebol has already cautioned that it's dealing with a “serious imbalance” in semiconductors globally. The shortage is reportedly also cramping Snapdragon 888's production.
According to research firm Trendforce, a shortfall in production of Qualcomm's 5G radio frequency chips could reduce smartphone output by 5 percent in the second quarter,
The tightened supply of Qualcomm AP chips produced by TSMC is affecting everybody except Apple." - MS Hwang, analyst at Samsung Securities.
The shortages are expected to remain a problem into next year and this could pose a problem for Apple. Hon Hai Precision Industry Co., which assembles the iPhone, has also warned that it will take time to resolve the chip supply imbalance.
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