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    A005930   KR7005930003

SAMSUNG ELECTRONICS CO., LTD.

(A005930)
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Analysis: Why Apple has chips for iPhones while Ford got caught short

04/29/2021 | 01:17pm EDT
FILE PHOTO: A Renesas Electronics Corp's chip is pictured at the company's office in Tokyo

SAN FRANCISCO (Reuters) - On the same day that Ford Motor Co said it would be able to produce only half as many cars as planned due to a global chip shortage, Apple Inc announced blowout quarterly earnings as smartphone and computer sales soared, with the chip shortage having only a small impact on its business.

The contrasting results show how major players in the electronics industry, accustomed to the long time horizons of chip production, have mostly avoided major disruptions from the chip shortage. Automakers and their suppliers, with "just-in-time" production lines that can more easily be spun up or changed to produce different varieties of parts, have not.

Apple said Wednesday that it would lose $3 billion to $4 billion in sales in the current quarter due to limited supplies of certain older chips.

Still, that represents just a few percent of Apple's projected sales of $68.94 billion for the fiscal third quarter, according to Refinitiv revenue estimates, compared to a massive 50% production hit at Ford.

German automaker Daimler also warned last week that the chip shortage would likely carry over to next year.

The supply bottleneck threatens to derail the country's fragile economic recovery.

Ford Chief Executive Jim Farley singled out a March fire at a Renesas Electronics Corp plant in Japan as a key factor in its chip shortfall.

But some of the problems at Ford and other automakers are the result of their own decisions. Many cut orders a year ago when the pandemic hit, and then were caught short when auto demand rebounded much more quickly and strongly than anticipated.

Farley gave a bleak outlook Wednesday, saying that even though the company was working "24/7" to address the issues, "there are more whitewater moments ahead." The problems could persist into 2022, he added.

Apple, which is famous for its supply chain management and has more buying power than any other company, has avoided problems so far in meeting surging demand in part by burning through supply buffers, Chief Executive Tim Cook told investors on a conference call Wednesday.

Problems procuring chips made with older-generation technologies will catch up with Apple in the current quarter, Cook said, noting that other industries also use such chips. He did not cite automakers specifically, but many of their components are based on such earlier-generation tech.

Apple expects the problems to mostly affect iPads and Macs - two product lines that have sold well as work-from-home tools during the pandemic but whose sales are a fraction of Apple's cash cow, the iPhone. Ford, by contrast, is facing production shutdowns for its most profitable product, the F-150 pickup.

The uneven impact of the chip shortage was evident in mobile phone chip supplier Qualcomm Inc's results announced Wednesday: The company said business was booming on strong demand for smartphone processors and 5G communications chips.

Mobile phone processors are not suffering the same kind of manufacturing capacity shortage as auto chips because they are made with more advanced production technology that chipmakers have spent heavily on in recent years.

Mobile phones do, however, require some older-technology chips in addition to their advanced processors. Samsung Electronics also announced strong earnings and said it expected to see a hit to smartphone sales in the current quarter due to the chip shortage. But profits at its chip division are expected to be robust.

In cases where advanced chip production technology faces bottlenecks, semiconductor firms are finding some ways to mitigate them. Advanced Micro Devices Inc on Tuesday raised its annual sales targets, with CEO Lisa Su saying the company saw no problems in secure the supplies needed to meet the targets.

To address a shortage in so-called "substrates" - a substance used to help put delicate silicon chips into tougher packaging so they can be placed on circuit boards inside electronic devices - she said AMD invested money into its substrate suppliers to secure dedicated capacity. 

"We're a bigger part of our suppliers' businesses, and we're looking for opportunities to help our partners get the capacity that we need in place," Su told Reuters in an interview. "We started that last year, and we're going to continue."

(Reporting by Jonathan Weber and Stephen Nellis in San Francisco. Additional reporting by Paul Lienert in Detroit; Editing by Lisa Shumaker)

By Jonathan Weber and Stephen Nellis


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
ADVANCED MICRO DEVICES, INC. 0.93% 84.31 Delayed Quote.-9.94%
APPLE INC. 0.01% 133.9602 Delayed Quote.-0.29%
DAIMLER AG -0.44% 78.95 Delayed Quote.37.27%
QUALCOMM, INC. 0.54% 135.84 Delayed Quote.-11.33%
RENESAS ELECTRONICS CORPORATION 2.71% 1175 End-of-day quote.8.90%
SAMSUNG ELECTRONICS CO., LTD. 0.13% 80000 End-of-day quote.-1.23%
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Financials
Sales 2021 267 859 B 236 B 236 B
Net income 2021 36 277 B 32,0 B 32,0 B
Net cash 2021 108 117 B 95,3 B 95,3 B
P/E ratio 2021 14,3x
Yield 2021 1,96%
Capitalization 538 744 B 474 B 475 B
EV / Sales 2021 1,61x
EV / Sales 2022 1,38x
Nbr of Employees -
Free-Float 82,7%
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Income Statement Evolution
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Mean consensus BUY
Number of Analysts 37
Last Close Price 80 000,00 KRW
Average target price 106 162,16 KRW
Spread / Average Target 32,7%
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Managers and Directors
NameTitle
Hyun-Suk Kim Co-President, Co-CEO & Director
Dongjin Koh Co-President, Co-CEO & Director
Kinam Kim President, Co-CEO & Director
Tae Moon Roh Co-President & Head-Research & Development
Hee-Chan Roh Chief Financial Officer
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