2021 smartphone production hit hard by chip shortage

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A new market intelligence report says smartphone production in 2021 is hit hard by the global chip shortage, which means growth will be significantly slower than expected.

IPhone production is doing better than other brands, but is still slowing down – with the cameras of the iPhone 13, a particular problem…

Background

A worldwide shortage of chips has been caused by a combination of three factors. First, a sharp increase in the demand for crisps due to the increasing use in the automotive sector. Second, the production disruption caused by the pandemic. Third, the long lead time required to bring new chip manufacturing capabilities online, which means that chipmakers cannot quickly ramp up production to meet demand.

Apple’s purchasing power and supply chain expertise means the company is able to negotiate priority supplies well in advance, isolating itself from much of the disruption. However, the company has warned investors that its own production is not immune and that Macs and iPads would be the first affected, iphone tracking.

Just yesterday we saw examples on both sides of the equation, with Taiwanese camera component suppliers prioritizing Apple, while camera module assembly was slowed down in Vietnam. The components of the camera seem to pose a particular challenge.

2021 smartphone production is hit hard

Counterpoint says things were fine earlier in the year, but not so much now.

The smartphone industry was on the verge of a strong rebound this year after COVID-19 hit the market hard in 2020. Smartphone vendors placed large component orders from year-end last, and consumer demand from delayed replacement purchases supported the market in the first quarter.

However, some smartphone manufacturers and suppliers report that they only received 80% of their requested volumes on key components during the second quarter of 2021, and the situation appears to get worse as we progress through the third quarter of 2021. Some manufacturers of smartphones now say they are only receiving 70% of their requests, creating multiple problems.

Counterpoint Research estimates that 90% of the industry is affected, which will impact the forecast for the second half of 2021.

The company says the market is still growing, but lowered its smartphone shipping forecast for 2021.

According to Counterpoint Research’s latest global smartphone shipping forecast, the total number of units shipped for 2021 is expected to increase by just 6% per year to 1.41 billion units; Counterpoint previously called for 9% annual growth to 1.45 billion units.

However, the blow to Apple will likely be less severe than most of its competitors.

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