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Chip Shortage To Significantly Affect Smartphone Shipments In 2021

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The ongoing global semiconductor chip shortage is said to significantly affect smartphone shipment growth this year. Several major OEMs have reportedly failed to secure as many components as they wanted. We are now looking at a lower than expected production volume of smartphones. As such, research firm Counterpoint research has lowered its smartphone shipment forecasts for 2021. The firm now expects global smartphone shipments to grow about six percent annually to reach 1.41 billion units. It previously estimated a nine percent annual growth to 1.45 billion units.

According to the company, some smartphone OEMs and vendors received only 80 percent of the requested volume of key components in the second quarter of this year. The issue is getting worse over time. Many OEMs are now reporting an even lower supply of components. Almost 90 percent of the industry is having to deal with this problem.

Samsung cited the chip shortage issue for canceling the Galaxy Note series this year. The Galaxy S21 FE appears to be another victim of this problem. Other OEMs are also facing similar problems. They are now having to reduce the production volume or cancel certain models.

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“The semiconductor shortage seems to affect all brands in the ecosystems,” said Tom Kang, Research Director at Counterpoint Research. “Samsung, Oppo, Xiaomi have all been affected and we are lowering our forecasts. But Apple seems to be the most resilient and least affected by the AP (application processor) shortage situation.”

Chip shortage hits the smartphone industry hard after a pandemic-effected 2020

The smartphone industry suffered a major slowdown last year due to the COVID-19 pandemic. The pandemic-induced financial uncertainty, as well as the restrictions imposed by the governments to contain the spread of the coronavirus, negatively affected sales of smartphones. A total of 1.33 billion smartphones were sold globally last year. The number marked a major, 10 percent annual decline in shipments from 1.48 billion units the year before.

But as the pandemic subsided, the market started to recover. Q4 2020 and Q1 2021 results promised a strong 2021 for the smartphone industry. However, an unprecedented chip shortage issue has now come down crushing all hopes.

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Experts believe this semiconductor shortage problem is here to stay for some time. Chip manufacturing companies like TSMC, Samsung, and Intel are working on expanding their respective production capacity. However, that will take time, at least a few years.

Meanwhile, the gap between demand and supply is so high that the current production capacity may not be able to close that down anytime soon. Time will tell how the tech industry copes with this unprecedented semiconductor issue.

Counterpoint 2021 smartphone shipment chip shortage

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