The Elec reports that application processors (AP) and radio frequency (RF) chips, two key components for smartphones, are short in supply. As a result, Samsung has scaled back smartphone production. The shortage is expected to persist through H2, 2022, at least, but Samsung has a plan to get around it.
While Samsung has the privilege of owning its own foundries, it still has to rely on others like TSMC and Global Foundries for other parts. A part of Samsung's strategy involves negotiating long-term contracts to ensure that they're immune to price fluctuations. However, that is easier said than done, as it has to contend with the likes of Apple and Intel for TSMC's precious fab space.
Samsung also plans on stocking up on at least four weeks worth of chips in advance to ensure that its production doesn't get affected by market imbalances. That strategy seemed to have worked out decently for Huawei, which used its stockpile of Kirin 9000 SoCs to power multiple P and Mate series smartphones for years.
Will these measures help Samsung stay afloat in these tumultuous times? Probably not, the chip shortage has created a cascading effect due to which multiple components are backed up, and it could take months, if not years, for the situation to correct itself.
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