After warning that microchip shortages were threatening Samsung to scale back its TV production soon, the company revealed it is looking to secure additional supply sources, including stepping up its own P3 semiconductor production line in Pyeongtaek S. Korea three months ahead of schedule
The fast-tracked chip plant was the result of global microchip shortages, according to a report on the S. Korean technology trade news site The Elec citing the president of EcoPro HN, a major Samsung supplier.
Last week Samsung uncharacteristically warned that the worsening global microchip shortages caused by a compounding of factors from Covid-19 to factory fires to the blockage of the Suez Canal could start to impact Samsung’s global TV production.
Nevertheless, the head of Samsung’s Display operations Han Jong-hee reportedly declared his confidence that the company would have enough supply for TVs for this year, but production could start to slowdown next year if the shortage conditions continue.
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The executive warned that the chip shortage was a real problem, and reports out of Korea said Samsung has met with Taiwanese chipmakers including MediaTek and NovaTek to secure supplies to help maintain its daily output of approximately 430,000 TVs globally.
P3 is Samsung’s third chip production line at the Pyeongtaek plant, for which construction began in the second half of 2020. The Elec report said the plant is expected to manufacture memory chips and foundry, or contract chip production.
Samsung is planning to build a total of six lines at its Pyeongtaek plant. P3 is expected to start operation in the first half of 2023, but that may now be advanced to early-2023 or earlier, due to the severity of the shortage.
Samsung’s status as the world’s largest manufacturer of television sets makes its warning dire, since any slowdown experienced by Samsung is likely to impact the rest of the world. The lack of product availability will likely force an increase in TV prices, as well.
According to Samsung’s recently released Q1-2021 financial report, “demand for TVs declined QoQ following the year-end peak in the previous quarter, but increased YoY due to sustained demand in advanced markets. The company posted both stronger sales and profit YoY as it leveraged its global SCM capabilities to swiftly respond to heightened demand. It also saw increased sales of its premium products, including strong initial sales of the new Neo QLED lineup.”
Fortunately, the roll out of vaccines for Covid-19 contributing to herd immunity will likely relax some demand for television sets in the second half of 2021 as consumers begin to take more activities outdoors, Samsung predicted. But more immediately, TV demand is likely to accelerate in the second quarter.
“In the second quarter, the company expects TV demand to increase YoY with major sporting events including the UEFA Euro 2020 and the Summer Olympic Games expected to take place,” Samsung said of its financial outlook. “However, risks persist around COVID-19 as new surges across the globe lead to additional lockdown measures. The company will aim to increase profitability by focusing on sales of its Neo QLEDs, responding to strong demand for home entertainment products, and successfully launching its new Micro LED products for home.”
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By Greg Tarr
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