Chip Supply Issues Are Still Giving Some of World’s Biggest Companies a Major Headache
May 2, 2022
An ongoing shortage of chips and other basic materials is forcing some of the world’s biggest tech and automotive companies to scale back their targets this year.
Apple CEO Tim Cook warned Thursday that the company was “not immune” to supply chain challenges, noting that the iPad business had “very significant supply constraints” during the most recent quarter.
The iPhone maker’s chief financial officer, Luca Maestri, said there are several challenges that need to be overcome in the current quarter, including supply constraints related to Covid-19 that could hurt sales by between $4 billion and $8 billion. Apple shares fell about 3.7% Friday following its earnings report.
Semiconductors are an essential piece of technology that allow a growing range of products to perform tasks they otherwise wouldn’t be able to. They’re in everything from toasters and kettles to fighter jets and Nintendo Switch consoles.
Elsewhere, Nokia CEO Pekka Lundmark told CNBC’s Julianna Tatelbaum Thursday that the Finnish telco would have grown faster in the last quarter had it not been for supply chain issues. “The situation has stabilized but it continues to be fairly tight,” he said.
“When we talk about semiconductors, we are seeing improvements here and there. It’s quite supplier-specific at the moment but when we look at the full year and the second half of the year, we continue to be hopeful that things will start looking better towards the end of the year.”
Automotive companies, which tend to use less advanced chips, continue to feel the impacts of the ongoing chip crunch. The global chip shortage wreaked havoc on the car industry in 2021 as many of them struggled to find the pieces of silicon they need to power features such as cruise control and parking sensors.
Daimler, CEO Ola Källenius, told Annette Weisbach Friday that ongoing supply shortages, particularly with regards to semiconductors, are one of the three main challenges in the current business environment. Källenius added that the new Covid lockdowns in China, one of Daimler’s biggest markets, could affect supply chains around the world.
The lockdowns in China are adding to short-term uncertainty, Lundmark said in reference to Nokia’s chip supply chain.
Also, Volvo Cars CEO Jim Rowan told “Squawk Box Europe” Thursday that Volvo doesn’t currently have enough of one particular chipset. He added that the company will be affected by the issue in its second quarter but said the company has “secured supply” that should help it in the second half of the year.
In a research note last month looking at the euro zone, Berenberg economists Kallum Pickering and Salomon Fiedler said the production of cars still lags far behind orders.They said that chip sales were recovering, but significant price increases meant the rebound in real terms was likely to be less than the sales value suggested.
“The process of catching up with the backlog of orders will take time. Companies will need to work overtime for a while,” they said in the note.
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