U.S. suppliers rejected Samsung's request for more chips, mobile boss left VP in country...

zakislam

Posts: 52   +1
Why it matters: The global semiconductor shortage has hit the technology industry hard. To see just what kind of measures companies are willing to take to address the lack of chips available for their products, look no further than Samsung.

According to a report from The Elec, Samsung mobile chief TM Roh traveled to the U.S. in March and July in 2021 to find a solution for the shortage. He purportedly visited a “global application processor maker” that wasn’t named to request an increase in chips but was denied on both occasions.

The source added that the processor manufacturer stressed to the South Korean tech giant of its desire to increase supply but couldn’t favour the request for Samsung alone.

Roh was reportedly accompanied by a vice president in charge of component purchases during the second trip in July. In a move that highlights just how dire the global chip shortage has become, the president left the VP behind in the U.S. in order to press the matter further with suppliers and resolve the issue.

The vice president was apparently told not to return to South Korea until a commitment for more chips was achieved but ultimately returned three months later. A Samsung spokesperson stated that their trips were somewhat fruitful as it was able to secure “some” volume to aid production.

Roh also “harshly” reprimanded another senior vice president who also managed component purchases at Samsung Mobile.

Sources added that the company being refused was “highly unusual” because of Samsung’s position as one of the largest smartphone makers in the world. One of the reasons attributed to the weakened buying power was its increased reliance on original design manufacturers in China, “as these companies procure components on their own, decreasing the South Korean company’s total component purchases.”

With the ability to obtain chips for its smartphones considerably impacted, it’s no surprise there have been reports about Samsung either delaying or outright cancelling the Galaxy S21 FE, which was due to be revealed during an October event. And it wouldn’t just be another Android phone to add to the lineup -- a cheaper version of the popular S21 smartphone could have been an enticing option for consumers.

Elsewhere, Samsung is close to finalizing the construction of a $17 billion semiconductor factory in Texas, according to Reuters. The 6-million-square-foot plant is expected to be running by the end of 2024.

Apple, meanwhile, by securing adequate supply for chipsets ahead of time, has not experienced the same issues its competitors are currently battling. The lack of silicon, for example, has particularly affected the production of low-end Android phones, an important segment of Samsung’s business. Moreover, thanks to demand for the iPhone 13, suppliers are prioritizing the firm over others like Samsung.

The global chip shortage is not only affecting smartphone production; the automobile industry is expected to lose $210 billion in 2021, and prices for products like GPUs continue to rise due to reduced availability. Come 2022, however, the semiconductor market shortage is expected to show signs of improvement -- AMD’s CEO says the shortage should ease during the second half of 2022.

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psycros

Posts: 3,725   +4,730
"One of the reasons attributed to the weakened buying power was its increased reliance on original design manufacturers in China, “as these companies procure components on their own, decreasing the South Korean company’s total component purchases.”

Boy, who would've thought that sending nearly all manufacturing to a country known mainly for cheap labor and technology theft could backfire?