Samsung warns a 'serious imbalance' of microchips could wreak havoc on smartphones

Business Insider US
The Samsung Galaxy Fold
  • Samsung warned investors that the worldwide microchip shortage is impacting production.
  • A "serious imbalance" between supply and demand of the chips continues, Samsung executives said.
  • Apple, which makes its own chips, has avoided some of the supply chain issues Samsung is facing.
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Samsung continues to feel the impact of the global microchip shortage, according to co-CEO Koh Dong-jin.

At Samsung's annual meeting in Seoul, Koh cited the "serious imbalance in supply and demand of chips in the IT sector globally" as a potentially major issue for Samsung in 2021, according to Bloomberg. The chip shortage has wreaked havoc all over the world, from car to video game console production.

Samsung is expected to announce and release two major smartphones in 2021: the annual updates to the Galaxy and Galaxy Note flagship smartphones.

The latter could skip 2021, Koh told shareholders at the meeting. "It could be a burden to unveil two flagship models in a year," he said, according to Bloomberg. In past years, Samsung has routinely launched both the Galaxy and Galaxy Note models of its smartphones. The former usually debuts in late winter or early spring, with the latter getting a debut in the late summer or early fall.

Though Samsung makes its own chips, the company's smartphones are reliant on third-party components - such as processors from Qualcomm.

Apple, however, produces its own processor for the iPhone, which enables the company circumvent some of the supply issues facing electronics manufacturers in 2021.

The processor shortage issue is "affecting everybody except Apple," according to Samsung Securities analyst MS Hwang.

Moreover, Apple's main production partner in China has reassured its customers that the chip shortage won't impact production much.

"Since most of the customers we serve are large customers, they all have proper precautionary planning," Hon Hai Precision Industry chairman Liu Young-way said in February, according to Reuters. "Therefore, the impact on these large customers is there, but limited."

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