Chip crunch to drive up costs, curb cellphone output next year: researcher

Global smartphone shipments might decline 2.1 percent next year as a shortage of memory chips drives up costs and squeezes production, industry tracker Counterpoint Research said yesterday.That marks a dramatic reversal from an estimated 3.3 percent gain this year, with the influential research firm slashing its projection for next year from a previous estimate of marginal 0.45 percent growth.The average selling price for handsets is set to rise 6.9 percent globally next year, reflecting a 10 percent to 25 percent jump in the overall cost of components, Counterpoint said in a research report.The global artificial intelligence (AI) build-out has spurred semiconductor producers this year to prioritize advanced memory for Nvidia Corp accelerators over more basic products. That in turn has fomented a shortage of the DRAM that is indispensable in electronics from laptops and electric vehicles to medical devices and appliances.In the past few months, consumer electronics makers including Xiaomi Corp (小米) have sounded the alarm about potential price increases, while others including Lenovo Group Ltd (聯想) have begun stockpiling memory in anticipation of rising costs. Nintendo Co’s shares have declined most of this month as concerns grow about the impact on its flagship Switch 2 console and profitability.With smartphones, Chinese brands such as Honor Device Co (榮耀) and Oppo Mobile Telecommunications Corp (歐珀) are seen as more vulnerable because of their lower margins.The memory deficit is likely to hurt entry-level smartphones in particular, Counterpoint said.“Apple and Samsung are best-positioned to weather the next few quarters,” Counterpoint senior analyst Yang Wang said. “But it will be tough for others that don’t have as much wiggle room to manage market share versus profit margins. We will see this play out especially with the Chinese OEMs as the year progresses.”The consumer impact could be felt in several ways.One approach would be for companies to push users to more premium models, where the profit impact will be less severe, the research firm said.Other options include reusing old components, downgrading other specifications such as cameras, or just selling handsets with less memory, Counterpoint said in its report.