Xiaomi president Wang Xiang has warned that the global chip crisis could cause the company to increase prices of its products. That’s because the shortage is putting upward pressure on costs. The Chinese company is currently the third largest manufacturer of smartphones.

The shortage has not just affected the production of smartphones, but also gaming consoles and the auto sector. 

The supply crunch can primarily be attributed to the coronavirus. The stay-at-home era caused by pandemic pushed demand for home-networking equipment and consumer electronics beyond estimated levels. This caused some businesses to stockpile, and they now have more inventory than usual. Huawei also began hoarding components around the same time to ensure survival from restrictions imposed by the US. The situation was exacerbated by the February Texas storm which impacted Samsung’s operations in Austin. 

The South Korean giant is one of the biggest smartphone chip manufacturers. 
According to research firm Trendforce, a shortfall in production of Qualcomm’s 5G radio frequency chips could reduce smartphone output by 5 percent in the second quarter, 

Taiwan Semiconductor Manufacturing Company (TSMC), which makes chips for Apple, has also been impacted but the Cupertino giant has not been affected so far. 

The shortages are expected to remain a problem into next year and this could pose a problem for Apple. Hon Hai Precision Industry Co., which assembles the iPhone, has also warned that it will take time to resolve the chip supply imbalance.

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