Concern. That is the word that can best define the situation that is being experienced in the world of technology right now. Especially at the factory floor where the global shortage of chips is beginning to affect companies as powerful as Foxconn. Apple's biggest ally and the one that produces the most for Tim Cook's company, sees how the supply of chips decreases more and more and it is already beginning to warn of cuts of 10%.
It has always been said that the best way to work as a team is to do it in the chain system. However, there is a problem and that is that if one link fails, the rest are affected. That is why there is always more than one chain and thus be able to supply the inconveniences. However, when the link that fails is the initial one, from which the rest must start, the solution is very difficult. This is what is happening right now with the chips.
There is a worldwide shortage of chips that is affecting every link in the chain. We were talking the other day that Apple (and others) could end up raising prices if they were forced to do so because of delays in shipments from production companies. The problem is no longer the delays, they are that they cannot send them because there are no raw materials and therefore it is not that there are manufacturing problems, ands that directly can not be manufactured.
There is little left for that situation to begin to occur. Foxconn, the Asian giant and Apple's best ally, has announced that if the deficiencies continue to exist, it is more than likely that they will have to reduce the production of devices by 10%. A very high amount taking into account that it is the first forecast of cuts that is made due to the lack of chip stocks worldwide.
According to statements from President Young LiuLa:
The supply in the first two months of this quarter was still good, as our clients are all very large, but we started to see changes that occurred this month. Foxconn is "currently" likely to ship 10% fewer products than you planned, without specifying the time period. Supplies for household goods are particularly limited, he added, as the pandemic has fueled a flood in those orders. The impact on orders that were secured a long time ago is quite limited. The shortage is likely to extend into at least the second quarter of next year.
Qualcomm is not escaping this shortage either. Many Apple devices are at risk
The supply crisis that also hits Qualcomm it will affect a wide range of smartphone manufacturers who depend on the company for key components. Apple, which is acquiring OLED panels from Samsung, could also face disruptions in iPhone production. Samsung currently supplies OLED screens for the iPhone 11 and iPhone 12. It seems that Apple will have no problems in starting the production of the devices with the new A15 and M1 chips because all the large companies have reservations precisely to avoid these problems.
We are not talking about this shortage being noticed right now. We are talking about the fact that it is likely that by the end of the year, when the new devices are announced for 2022, we will have to face the same number of devices that we are used to not being put on the market. And if it were only that, nothing would happen. The problem is that prices can rise and I am afraid they will do so in a proportion not equivalent to the reduction in production. If we are now talking about a 10% drop in production, we could talk about a rise in prices around 20% easy.
Let's hope the pandemic is ending now, because of course we are not getting anything good out of it. The pandemic is one of the biggest culprits for that chip deficit, due to the amount of market that has moved with home devices. Logical, with all the hours that we are spending in our homes.