Samsung thinks about giving the Galaxy Note refresh a miss this year as semiconductor supplies run dry

Samsung Electronics is contemplating skipping this year's Galaxy Note flagship as the business grapples with an industry-wide shortage of semiconductors.

Speaking at a shareholder meeting, co-CEO Koh Dong-jin bemoaned a "serious imbalance" in the supply chain which has yet to be resolved.

"There's a serious imbalance in supply and demand of chips in the IT sector globally," Koh said. "Despite the difficult environment, our business leaders are meeting partners overseas to solve these problems. It's hard to say the shortage issue has been solved 100 per cent."

Regarding the Galaxy Note, Koh told investors: "[The] Note series is positioned as a high-end model in our business portfolio. It could be a burden to unveil two flagship models in a year so it might be difficult to release Note model in [the second half]. The timing of Note model launch can be changed but we seek to release a Note model next year."

Although Koh didn't suggest the Note would be permanently discontinued, as previous speculation had suggested, it's certainly true the device doesn't quite fit as neatly into Samsung's line-up as it once did. The selling points that previously set it apart from stablemates (such as support for the S-Pen and ultra-wide band communications) are now found on the Samsung Galaxy S21 Ultra. Functionality wise, the only real difference is a marginally bigger screen (6.9 inches versus 6.8 inches).

Given this overlap, Samsung could be forgiven for choosing to discontinue it in favour of a more streamlined output, even if it appears it's not something being publicly considered right now.

Driving supply chains up the wall

Hardware vendors have experienced serious production backlogs in past months, with producers of PCs most severely affected. Next-generation games consoles and graphics cards have been in short supply, as have web cams, displays and other tech that helped people to work, learn and play at home.

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Auto makers have not been immume to this chip shortage, with manufacturers expecting an industry-wide $61bn loss of revenue. This dilemma was created by the sector's reliance on just-in-time manufacturing processes, with carmakers keeping parts inventory levels to a bare minimum.

Exacerbating the problem, many carmakers cut semiconductor orders at the start of the pandemic, when consumer confidence was at its lowest. Semiconductor manufacturing is a lengthy process, and it will take time for the supply of automotive components to satisfy demand, especially given the competition for fab time from consumer and industrial electronics manufacturers.

Analysts have expressed concerns that the semiconductor shortage will continue to dog makers of tech hardware, with these woes exacerbated by the temporary shutdown of production at Samsung’s Texas fab plant in February.

Earlier this month, analyst Trendforce said the halt in operations would lead to a shortage of Qualcomm's RFIC chip during Q1 2021, with production of 5G phones tumbling 30 per cent as a result. The analyst also noted that 5G smartphone penetration could fall to 36.5 per cent, from the previously forecast 38 per cent. ®