The tech industry has been hit hard by the COVID pandemic and the chip shortage that followed. On top of that, Russia’s invasion of Ukraine has wreaked havoc on an already stressed global supply chain. The end result is that companies like Samsung will have to cut back on production short forecasts and absorb a significant loss of income.
According to a report by South Korean business news daily Maeil Business News, the tech giant has had to make the difficult decision to produce fewer phones than it initially planned. Apparently, Samsung has informed its production partners and distributors that it plans to ship just 280 million smartphones this year, as opposed to the previous forecast of 310 million units. However, South Korean investment analysts also allege that there is a strong possibility that Samsung will have to cut its production by as much as 35 percent, if the situation between Russia and Ukraine continues and if global supply chains are not resolved. they put in order One of the key reasons why Samsung has had to make this drastic decision is the high inflation worldwide and the disruption in supply chains caused by the military conflict between Russia and Ukraine. The conflict means that the raw materials needed to manufacture several key components of a smartphone are not readily available. Even if they were available, the prices of these raw materials have skyrocketed so much that it would not be feasible for Samsung to absorb the costs, nor would it be feasible to pass them on to the customer.
Samsung’s lower target is another sign of a growing trend of phone makers bracing for the potential impact of a worsening global economy. Earlier this year, Apple also reported that they will produce just 220 million iPhones this year against a market forecast of around 240 million units. Although Apple will limit production of its flagship products only, Samsung will reduce production across its entire lineup. This raises a number of questions regarding the smartphone industry in the future. The most pertinent of these is whether this is a pause after a decade of explosive smartphone sales, or the arrival of new technology like folding screens and the cameras under the screen are enough to carry the industry forward. Via: FirstPost
