An iPhone May Be Your Only New Smartphone Option as Chip Shortages Dominate Manufacturing

Editorial use only, NO SALESMandatory Credit: Photo by BROOKS KRAFT/APPLE INC/HO/EPA-EFE/Shutterstock (10952966y)Handout image released by Apple showing the new Apple iPhone 12 and iPhone 12 Pro Max, introduced during a special event at Apple Park.

Automakers have been bearing the brunt of the worldwide chip shortage, but now the smartphone industry is beginning to feel the pinch. Shipments are slowing down and customers are seeing significant price increases, reports The Wall Street Journal.

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The chip shortage has been felt in the automotive, personal computer and home-appliance industries. However, the phone industry had largely avoided this shortage. The WSJ reported that while phone manufacturers typically purchase supplies half a year in advance, they are now running low on stockpiles.

Samsung Electronics experienced a 20% drop in shipments after having problems sourcing key parts, reports WSJ, and Google announced its Pixel 5a 5G device would be available only in the U.S. and Japan. Last March, China’s Xiaomi released its Redmi Note 10 in India at $161 per device; the phone now retails at $174, about 8% higher than the original price. Xiaomi also released the Mi 11 Ultra in India in April, but sales were delayed.

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Chip shortages are also resulting in higher component prices, which are raising the prices of smartphone devices. The average wholesale price for phones worldwide went up 5% in the second quarter, according to market researcher Strategy Analytics and as reported by WSJ. Before that, prices didn’t increase by more than 2%.

There have also been additional delays across the industry due to the impact of the pandemic on consumer spending and its effect on production in India and Vietnam, WSJ added. Zhengzhou, China, home to the world’s largest iPhone assembly plant, has also been experiencing heavy rains and flooding. Foxconn, the assembly plant for Apple’s iPhones, said on Wednesday that its factory had not been impacted by major flooding in the city, reports CNBC.

While many phone manufacturers are experiencing delays, chip supply difficulties aren’t affecting the smartphone giants. WSJ noted that Apple, which accounts for one-sixth of the 1.3 billion smartphones sold each year, hasn’t had any troubles, according to industry analysts.

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“If you have limited chips, where will you put them? The ones that give you the most profit,” said Cliff Maldonado, principal analyst at Baystreet Research LLC, reports WSJ.

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Last updated: July 21, 2021


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