Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

Chip Shortage Affects TVs, Smartphones OLED Displays

Wed 07 Jul 2021 | 07:57 PM
Taarek Refaat

The chips, whether they're sophisticated enough to power self-driving cars or simply used for mobile phone, or TV OLED displays , which are made of the same round silicon wafer, have risen 15% this year.

Companies like HP, which has raised its PC prices by up to 14% to reflect higher component prices, have warned of further increases.

The input factors for all chips are largely the same, whether the end product is an advanced chipset or a simple processor.

This means that chip maker capacity allocation is more likely than ever to be dominated by industries that demand large quantities of expensive chips, allowing no room for maneuver.

OLED screens are already one of the most expensive components of a smartphone. The Samsung Galaxy Note 20 Ultra display costs $92 and the iPhone 12 Pro is about $70 per unit, more than the $57 needed for the main processing chip and $60 for the camera.

Apple's hardware profit margin decline in 2018 coincided with the adoption of OLED screens for some of its models.

The shortage of OLED chips are already emerging, similar to those seen in the broader chip market last year before the global shortage. Prices rose by a fifth in the second quarter, adding to a similar increase in the previous quarter, pushing companies toward stockpiling.

However, the incentive for Samsung and TSMC to allocate valuable capacity to low-margin display chips continues to decline, and display monitors are set to further accelerate price inflation in electronics.

Vehicle companies are also warning about the impact of chip shortages on sales. Jaguar, Land Rover expects a larger delivery shortfall this quarter, saying sales will be 50% worse than companies initially thought, according to a Bloomberg report.

Expectations indicate that automakers are expected to lose about $110 billion due to the shortage.