Samsung: Auto Chip Shortage Could Strike Smartphones

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Foundries are focusing on automobile memory chips to address a global shortage, which Samsung Electronics warns could mean fewer chips for tablets and smartphones. Samsung is considering increasing the capacity of its foundries, which brought in record revenues during 2020’s final quarter, according to Ars Technica.

The warning comes as companies and governments grow concerned that tightened chip manufacturing capacity could derail countries’ economic recoveries from the coronavirus pandemic. Many semiconductor foundries are operating at full capacity, limiting their ability to take on new orders. That could slow deliveries of chips designed for mobile devices.  

Samsung said Thursday the squeeze on foundries, and any subsequent slowdown in mobile device orders, could affect demand for its Dram and Nand memory chips, which enable smartphones and tablets to perform multiple tasks at once.

“Because of the foundry supply shortages that have become an issue globally, the supply issue of other semiconductor parts could affect mobile demand, so we are closely watching the implications,” said Han Jinman, executive vice president of Samsung’s memory chip business.

Global semiconductor players are also moving to address chip shortages for automakers. Taiwan Semiconductor Manufacturing Company, the world’s biggest contract maker of processor chips, said Thursday its “expediting” automotive-related products in an attempt to meet automakers’ needs, reported Ars Technica.

Samsung is also considering quickly expanding foundry capacity. The company’s foundry business posted record quarterly revenues in the three months to December, it said Thursday. The results were led by strong demand for chips used in 5G mobile devices and high performance computers.

Samsung said a stronger South Korean won and higher production costs would hit the group’s first-quarter earnings, but its full-year outlook remained bright. Semiconductors, which accounted for nearly half of Samsung’s operating profits last year, are likely to drive an earnings increase in 2021 as chip prices rise. “The chip price increase this year won’t be as rapid as 2017-18, but we will see a steady rise with a prolonged upcycle, which will be healthier,” said Macquarie analyst Daniel Kim.

The company’s net profits in the fourth quarter rose by 26.4 percent year-on-year to U.S. $5.78 billion.

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