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Phones

Is the smartphone market entering a downhill trend? TSMC believes so

By Samuel Martinez March 31, 2022, 3:01 am
iPhone SE 2022
Apple iPhone SE 2022
Source: Apple

We’re about to enter the second quarter of 2022, which means that we will soon start to see earnings reports from some of the most important companies in the tech world. Take Apple, for example; the company recently said it will announce its second-quarter earnings for 2022 on April 28. Naturally, we are expecting to see new record-breaking sales numbers in almost every department, as it seems that Cupertino always surpasses its sales expectations. Still, the latest information from TSMC suggests that smartphone sales will start to be affected as demand for smartphones and other devices is slowing.

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According to TSMC’s Chairman Mark Liu, demand for smartphones, PCs, and other consumer electronic devices will decrease because of the ongoing pandemic and the issues caused by conflicts back in Europe. This information is rather critical considering that Taiwan Semiconductor Manufacturing Company is one of Cupertino’s main suppliers, as it is in charge of making the A-Series and M-series chips that are found in the latest Apple products.

“Everyone in the industry is worried about rising costs across the overall supply chain... The semiconductor industry already and directly experienced that cost increase.”

Further, Liu warns about the changes in the pricing of components and materials, as everything is getting more and more expensive. In other words, production costs will most likely go up, and these costs “could eventually be passed on to consumers,” which means that the demand for new devices may also be affected by higher price tags.

However, this doesn’t mean that TSMC isn’t prepared for what may lie ahead, as the company will “reorganize and prioritize orders” to supply those customers who can sustain healthy demand.

“Despite the slowdown in some areas, we still see robust demand in automotive applications and high-performance computing as well as internet of things-related devices. We still cannot meet our customers’ demand with our current capacity. We will reorganize and prioritize orders for those areas that still see healthy demand.”

However, this may also hit Apple, as recent rumors suggest that the company is also planning to cut down on iPhone SE 2022 production by up to 20 percent, as its recently launched smartphone isn’t selling as well as the company had expected. Ming-Chi Kuo also mentioned that “the new iPhone SE demand is lower than expected,” which may force Cupertino to reduce its production to 15 to 20 million units, down from the originally planned 25 to 30 million orders.

iPhone SE 2022 Source: Apple

The reasons behind these possible changes in production may also be linked to the ongoing conflict between Russia and Ukraine, which has also affected Samsung’s branding in some European countries. Further, inflation is another important factor that will most likely make everything more expensive.

To make things worse, we must also remember that fuel prices have constantly been going up, so it’s also logical to think that shipping prices will go out of control. Moreover, shipping container rates from China to the US keep on the rise, which means that we may also get to see this factor affecting the final price tag on future consumer electronics, which would also affect demand. But then again, we could also see users opt to buy their new devices and other products before prices go through the roof. And that’s exactly what I did with a little something I bought recently.

For now, we can only hope that the latest variant of COVID-19 gets under control and that Russia and Ukraine find a peaceful solution to their problems without having to cause unnecessary conflicts and, more importantly, without having to hurt innocent people.

Source: Nikkei Asia | Via: MacRumors

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