Global Smartphone Industry Feeling Impact of Chip Shortage

The smartphone industry is finally feeling the impact of the semiconductor shortage that has bedeviled the auto, PC and home appliance industries. Samsung Electronics, for example, expects a 20 percent drop in shipments from last quarter, due to problems sourcing key parts. Google’s Pixel 5a 5G device will only be available in the U.S. and Japan, even though last year’s models were given a wider release. China’s Xiaomi, which recently surpassed Apple to capture the No. 2 spot in global shipments, has raised the price of its flagship India device, the Redmi Note 10, to $174 from $161. 

The Wall Street Journal reports that industry analysts said that Apple, which accounts for “about a sixth of the 1.3 billion smartphones sold annually,” and most of Samsung’s top-of-the-line devices have avoided this problem due to “supply-chain clout.” But 80 percent of the smartphone market is left out in the cold. Counterpoint Research reported that, “global smartphone shipments for the first three months of 2021 soared 20 percent from a year earlier and were 4 percent higher than the comparable period in 2019.”

During COVID-19 lockdowns, “global smartphone shipments had bottomed out … during the April-to-June quarter.” And although Q2 shipments are usually better than Q1’s, “this year looks to be an exception.”

Counterpoint estimated that “industrywide shipments are expected to drop by 10 percent in the second quarter from the first … [and] smartphone unit sales for the rest of the year also look relatively flat compared with 2019 and 2020.” Counterpoint projected that, “global smartphone shipments in the second half of this year will total about 771 million units, up 1.3 percent from the 761 million units shipped a year earlier.”

Counterpoint research director Tarun Pathak said that, “higher component prices brought on by the chip shortages are getting passed through for now by raising device prices.” Strategy Analytics said that in the April-to-June quarter, the average wholesale price for phones globally rose 5 percent but the company’s executive director Neil Mawston noted that, with 5G, “consumers almost expect higher prices.”

A healthy lead time for semiconductors is pegged at 12 to 14 weeks but, at Susquehanna Financial Group, research associate Duksan Jang said that, “as of June, the average lead time for semiconductors stood at 19 weeks, longer than 16 weeks, which is considered a supply-chain danger zone.”

Despite 77 million smartphone shipments in Q1, Samsung mobile chief Koh Dong-jin “warned that a chip shortage would hurt its business in the April-to-June quarter.” CLSA senior analyst Sanjeev Rana originally forecast that Samsung would ship “about 65 million phones” in Q2 but now said the company “missed that mark by 7 million units — with about half of that attributable to component shortages.”

Counterpoint Research also revealed that, in the first half of 2021, about 310 phones were launched, “an 18 percent drop from 370 devices a year earlier.” BayStreet Research principal analyst Cliff Maldonado stated that, “any delays are unlikely to affect the U.S., the world’s most profitable smartphone market, though they could reach less-affluent markets and lower-end phones.”