The global shortage of chips extends to toasters and washing machines

According to Asian suppliers, the deepening of the global chip crisis extends to manufacturers of smartphones, TVs and home appliances as companies increase demand for semiconductor supplies.

Chip supply has declined due to growing demand for electronics during the pandemic and Covid-19 interruptions to large production facilities.

But scarcity has been exacerbated by hoarding sanctions affect Chinese groups, which has hampered component safety for everyday electronic components such as washing machines and toasters.

Samsung Electronics of South Korea and LG Electronics are among the groups feeling the skin of manufacturing delays that are expected to last 2022.

Samsung began downsizing orders for some smartphone components this month, according to two of its leading parts makers, after the world’s largest chip maker warned in March of a “severe imbalance in supply and demand” of semiconductors.

“Application processors, screen controllers and camera sensors are scarce. As a result, we are seeing Samsung order drops in the current quarter, “a major smartphone parts supplier told the Korean company.” Temporary sales drops are inevitable, but we expect the situation to improve. from June, as back orders are likely to reach a larger volume in the second half. “

Koh Dong-jin, co-executive and head of Samsung’s mobile business, has warned of possible problems in the second quarter due to chip shortages. He said last month that the company might have to postpone the launch of its high-end smartphone until next year. Samsung is also a major chip maker through its casting business.

LG, a major home appliance maker, said the shortage of chips had not yet halted production, but admitted it was a risk. “We are closely monitoring the situation as no manufacturer can be left free of the problem if it is prolonged,” the company said.

A small Seoul TV maker said: “It’s getting harder and harder to secure key components unless you pay higher prices. We need to raise TV prices, reflecting rising material costs.”

The production of low-margin processors that perform simple tasks such as weighing clothes in the washing machine or crushing bread with a smart toaster has been affected.

“Microcontroller units are supplied on a small scale, which could affect general appliances,” said Randy Abrams, head of Asian semiconductor research at Credit Suisse.

The production of these chips used in appliances has ended at the end of the queue, as manufacturers allocate capacity high margin products, said an industry expert.

South Korean foundries said they were unable to meet growing orders even while operating at full capacity.

“Customer orders for chips used in smartphones, TVs and other appliances exceed our capacity,” said an official from DB HiTek, which manufactures chips used in Apple iPads. “Screen controller chips, power management chips and image sensors are especially scarce.”

A deficit has pushed companies to place orders with several chip makers, a phenomenon known as “double reserve,” an industry official said.

The official added that the chip crisis had been exacerbated by the aggressive storage of Chinese companies, which are preparing for additional sanctions as Washington tries to curb Beijing’s 5G ambitions.

Taiwan Semiconductor Manufacturing Company, which operates in addition to its maximum capacity, expects the chip shortage to last until 2022. The company will invest $ 100 billion over three years to expand its capacity.

Nanya Technology, Taiwan’s leading memory chip maker, on Tuesday announced plans to build a $ 10 billion plant in the country to alleviate the shortage and capture the growing demand for 5G-related components.

However, analysts believe the shortage could end as quickly as it would begin if e-spending fades as the pandemic recedes.

Investors “will find out how much of the demand profile is real and how much is ghosted,” Stacy Rasgon, a Bernstein semiconductor analyst, wrote in a note.