Top Apple Chip Supplier Has A Warning For Smartphone Industry

Demand for smartphones, PCs, and TVs is slowing down amid geopolitical tensions and COVID-related lockdowns in China, the chairman of Taiwan Semiconductor Manufacturing Co (TSMC), Mark Lui, said earlier this week. China, which is the world’s biggest electronics consumer market, is also showing signs of slowing demand, Nikkei Asia reported citing the company chief. TSMC is Apple’s key supplier and the world’s biggest contract chipmaker. Liu also warned that the cost of components and materials is rising sharply, pushing up production costs for tech and chip companies.

The latest report comes a day after the publication reported that Apple reduced orders for its recently released iPhone SE by up to three million units. Nikkei adds that TSMC is not likely to change its growth target and capital expenditure this year. Liu notes, “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 reorganise and prioritise orders for those areas that still see healthy demand."

TSMC, like other chip manufacturers, have been struggling with supply issues since late 2020. Earlier this year, the International Monetary Fund trimmed its global forecast for 2022 COVID-19 related uncertainties. China imposed harsh lockdowns in some western areas of Shanghai (East coast of China) as new COVID-19 cases continue to rise.

Economists at the Chinese University of Hong Kong, Tsinghua University estimate that locking down major business hubs like Shanghai in full-scale would result in a drop of 4 percent in China’s GDP. Additionally, Russia-Ukraine is having a major impact on fuel prices that may increase the prices of several commodities.

WATCH VIDEO: Why Smartphones Are Becoming Expensive In India, Explains Xiaomi India COO Muralikrishnan B

Meanwhile, smartphone shipments grew 4 percent YoY to reach 1.39 billion units in 2021, a Counterpoint report highlighted in February 2021. However, the shipments declined 6 percent YoY to reach 371 million units in the fourth quarter of 2021.

Read all the Latest Tech News and Breaking News here