Samsung expecting tight supply of AP and RF chips to continue through 2022

Samsung believes the chip shortage will continue to affect its smartphone operation up to the second half of 2022.

The issue was discussed by TM Roh, the president of Samsung Mobile, during a meeting on November 10 with senior executives and executives from over 30 of its major smartphone component suppliers, sources told TheElec.

The meeting was held to discuss their business plan for 2022, the source said. At the meeting, the executives evaluated Samsung’s smartphone business strategy based on the state of the global economy and industry trends expected next year, they said.

According to the sources, chip shortage was one of the major agendas of the meeting. Samsung’s smartphone production was impacted this year by the shortage of application processors (AP) this year. The company couldn’t make as many units of smartphones as it wished due to the shortage.

Samsung Mobile believes this situation will continue in 2022. 

Supply of AP and RF chips will be tight up to the second half of next year, the business division said at the meeting, the source said.

Therefore, securing chip stably will be a key point for the company to meet its business target for the year, the executives at the meeting concluded as the end.
 
Samsung Mobile also believed the shortage in production capacities by foundry companies __ companies that contract manufactures chips designed by their customers __ to continue.

Fabless companies __ companies that design chips but don’t manufacture them, such as Qualcomm __ will therefore focus on supplying products with high margins first, Samsung Mobile believes.

In the foundry market, the foundry companies either continue to maintain their upper hand against fabless companies, or this could be exasperated further with foundry companies having even more leverage over their customers, Samsung Mobile believes.

The foundry companies, like they did this year, will likely increase their service prices this year, the business division said in their forecast during the meeting.

Samsung Mobile will seek annual contracts to secure production capacities from foundries beforehand to minimize the impact of these trends, they concluded at the meeting.

The business division will also stock up to four weeks worth of chip stock, instead of two weeks worth as they do now, they concluded.

An executive from a Samsung component supplier told TheElec that the meeting showed that even global conglomerates like Samsung are facing difficulty in procuring components at the right time due to ship shortage.