Samsung is announcing this morning that it may have to postpone its high-end smartphone Note as the global chip shortage is getting worse to a degree where Samsung’s mobile chief say the imbalance is serious. The global supply issues in the semiconductor industry hit initially the car industry which will produce fewer cars because of the chip shortage, that was initially created last year due to lockdowns impacting demand negative causing carmakers to pull orders for computer chips. The car industry was surprised about the rebound in demand and reordered computer chips, but chipmakers had already reallocated supply to higher profit pools in higher end laptops, smartphones, and crypto mining.
But now the chip shortage is beginning to impact the broader consumer electronics market including Qualcomm which is a key supplier in the global smartphone industry. This is evidence of supply constraints coupled with high demand and could cause prices to soar rapidly ultimately ending with higher consumer prices for electronics. The S&P Semiconductor Select Index (only US semiconductor companies) is up 26.3% annualised since the end of 2008 on a total return basis highlighting the blistering growth of semiconductors in the age of digitalisation. We remain very bullish on the semiconductor industry and expect the imbalance to be sorted by the second half of this year.