According to reports, the weakening demand in the global smartphone market has caused Samsung Electronics to cut its device production output, thus inflicting another blow on its semiconductor business and related component suppliers.
Korean media have cited industry sources as saying that Samsung’s LSI division of the system is considering reducing or even terminating its contract with UMC in the production of image sensors.
To mitigate the impact of the chip shortage, Samsung increased its outsourcing to chip manufacturing in 2021 and reportedly invited UMC to manufacture image sensors. However, demand for cellular cameras has waned, and the supply chain is struggling amid many variables, including the impact of closures imposed by the Chinese government in recent months to prevent a resurgence of corona.
According to reports, Samsung is reducing orders given to suppliers and even the orders from external chip manufacturers. It may have changed the production target of its Galaxy A model. To lower production costs, it has also made more work available to ODMs and JDMs from China.
According to Counterpoint Research, global smartphone shipments will reach 1.3 billion units in 2022, down 3% from 2021. Other market research agencies like IDC have also updated their forecasts for smartphone shipments by 2022.
Korean vendors of camera modules and smartphone boards felt the impact of Samsung’s policy changes on their sales in the second quarter. Due to the Corona plague the contracts between businesses are subject to different levels of change. For Samsung vendors living in the device industry, they are having a hard time and may be waiting to see if Samsung can make a breakthrough with its new folding devices in the third quarter.