• Daniyar Kylyzhov

Samsung warns of possible abandonment of Galaxy Note this year due to chip shortages

Samsung expects the crisis to create problems for business in the next quarter. Top management notes that they are holding meetings with foreign partners to solve these problems.

Although the Korean company is the leading chip maker after TSMC, it relies on outside companies to supply some of the components, such as power controls and radio chips.

Record smartphone sales during the pandemic have boosted demand for mobile chips from Qualcomm, which also relies on Samsung and TSMC. "The shrinking supply of TSMC's Qualcomm AP chips is affecting everyone but Apple," said an analyst at Samsung Securities. "PCs will soon suffer from a shortage of chips for display drivers, and TV profitability will be affected by skyrocketing LCD panel prices."

To make matters worse, Samsung's own production was shut down last month . A factory in Austin, Texas, which makes chips for both internal and external consumption, was shut down in February due to a power outage.

Research firm TrendForce estimates that the resulting shortfall in the production of Qualcomm 5G RF chips could reduce global smartphone production by 5% in the second quarter. Global demand for microcircuits turned out to be 10-30% higher than the current supply, and it will take at least 3-4 quarters for the market balance to recover, analysts say.

But, according to Greg Roe, senior vice president of HMC Securities, the disruption is likely to impact Samsung's mid-range phones and laptops more than high-end models or server chips.


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