Many Of The Largest Firms Of The World Still Troubled By Chip Supply Issues

Due to a continuing shortage of chips and other essential ingredients, some of the world’s largest tech and automotive businesses have had to lower their expectations for this year.

Apple CEO Tim Cook warned on Thursday that the company was “not immune” to supply chain issues, citing “quite significant supply constraints” in the iPad business during the most recent quarter.

Luca Maestri, the iPhone maker’s chief financial officer, said the upcoming quarter will face various problems, including supply restrictions relating to Covid-19, which could reduce sales by $4 billion to $8 billion. Following its results release, Apple’s stock dropped approximately 3.7 per cent on Friday.

Semiconductors are a vital component of technology that enables an increasing number of items to accomplish activities that they would not otherwise be able to. From toasters and kettles to fighter jets and Nintendo Switch consoles, they’re everywhere.

Nokia CEO Pekka Lundmark told CNBC that if it hadn’t been for supply chain challenges, the Finnish telco would have expanded faster in the latest quarter.

“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.”

Auto making firms , which tend to use older chips, are still feeling the effects of the ongoing chip shortage.

In 2021, the global chip scarcity created havoc on the automotive industry, as many manufacturers struggled to find the silicon needed to operate systems like cruise control and parking sensors.

One of the three primary issues in the current economic environment, according to Daimler CEO Ola Källenius, is continuous supply bottlenecks, particularly in semiconductors.

The new Covid lockdowns in China, one of Daimler’s largest markets, might influence supply chains around the world, according to Källenius.

In reference to Nokia’s semiconductor supply chain, the Chinese lockdowns are adding to short-term uncertainty, according to Lundmark.

Volvo Cars CEO Jim Rowan said on CNBC that the company doesn’t have enough of a certain chipset right now.

He went on to say that the issue will impact the company in the second quarter, but that the company has “secured supply” that will benefit it in the second half of the year.

Berenberg economists Kallum Pickering and Salomon Fiedler wrote in a research note last month about the euro zone that vehicle manufacturing still trails significantly behind orders.

They said that chip sales were rebounding, but that due to considerable price increases, the recovery in actual terms would be less than the sales value implied.

“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.

(Adapted from CNBC.com)

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