Samsung Electronics Co. Ltd. has become the latest technology giant to voice its concerns over a global shortage of semiconductor chips.

The company, which is one of the largest chipmakers and consumer electronics firms in the world, said Wednesday that it’s struggling to address a “serious imbalance” in its chip supply.

Samsung may even decide not to launch a new Galaxy Note smartphone this year, co-Chief Executive Officer Koh Dong-jin said during the company’s annual shareholders meeting in Seoul.

Fears over the global chip supply emerged last year when a number of carmakers said low inventories of microprocessors were likely to hurt their businesses in 2021. Taiwan Semiconductor Manufacturing Co., one of the world’s largest suppliers, sparked more concerns in January when it said it would boost its capital investments by 47% this year to try to meet surging demand for its products.

A number of factors are believed to be behind the global chip shortage. Rising demand for laptops, TVs and games consoles during the COVID-19 pandemic, as well as the need for more cloud computing services to power remote work, have affected supplies. In addition, a jump in demand for new 5G smartphones has squeezed manufacturing capacity. And U.S. restrictions on companies such as China’s Huawei Technologies Co. Ltd. have prompted some firms to stockpile chips.

Chipmakers as diverse as TSMC, Samsung, NXP Semiconductor NV and Nvidia Corp. are all struggling to meet the increased demand, Bloomberg reported. The problems were compounded recently by the statewide power outages affecting Texas in February, where one of Samsung’s largest semiconductor fabs is based.

That facility has yet to resume full production, leading to a shortfall in production of Qualcomm Inc.’s 5G radio frequency chips that are used in smartphones. Trendforce estimates that could lead to a 5% reduction in global smartphone output in the second quarter.

Bloomberg said Samsung is working with overseas partners to try to resolve the chip supply imbalance and avoid any setbacks in its business.

“There’s a serious imbalance in the 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.”

World leaders are taking the issue seriously too. Last month, U.S. President Joe Biden signed an executive order to review the supply chains that provide the nation with critical products such as semiconductors. The order was said to be part of the Biden administration’s strategy to create more resilient and secure supply chains for critical goods. Also that month, France and Germany published a paper calling for European leaders to create measures to “reduce, where relevant, strategic dependencies” on critical supplies such as semiconductors.

The auto industry has been especially hard hit by the shortage, resulting in delays fulfilling orders and some factories sitting idle while waiting on supplies. For example, Volkswagen Group has said that bottlenecks mean it will produce about 100,000 fewer cars in the first quarter of this year at its sites in Europe.

Then today Honda Motor Co. said it will temporarily suspend production at a majority of its U.S. and Canadian plants. Others, including Groupe Renault, Daimler AG and General Motors Co., have also said they’re grappling with chip shortages.

Some analysts say the chip shortages will probably be resolved in the coming months. But others are worried that tight supply in some sectors could throttle the broader consumer electronics industry, leading to rising prices of certain products.

Samsung’s admission that it may face some disruption is a big wakeup call, Charles King, an analyst with Pund-IT Inc., told SiliconANGLE. He said that although demand for new laptops, data center gear and 5G phones is a part of the problem, supply chain disruptions that resulted from the COVID-19 pandemic last year have also had a big impact.

“Chip production, an exacting process in the best of times, is even more complex and demanding when fabs are short on workers or subjected to closure due to COVID restrictions,” King said. “Add in the fact that some products need more and more processors, with modern automobiles using anywhere from 50 to 150 chips each, and it’s easy to see how shortages can roil entire industries and markets.”

King said that he thinks the situation will improve as the pandemic eases, and programs such as President Biden’s “Build Back Better” infrastructure bill will free up billions of dollars in grants and tax breaks to fund the construction of new fabs.

“Unfortunately, that’s quite a ways in the future,” he warned. “In the short term, the situation for many chipmakers and their myriad customers is likely to be highly challenging.”

Another analyst, Holger Mueller of Constellation Research Inc., told SiliconANGLE that the chip industry has found itself in a perfect demand storm.

“Samsung deserves kudos for pointing out the potential issues that probably all smartphone makers are facing this year,” Mueller said. “It would be the first time in a very long time that smartphones have been delayed not for production or design issues, but because of basic underlying supply shortages.”

Hon Hai Precision Industry Co. Chairman Young Liu told reporters today that it will take time for imbalances in supply and demand to be resolved.

“We see a shortage, we feel it. But the impact for most of our customers is not that big,” he said. “For certain customers that have better-than-expected orders, there’s some impact. For major customers that plan well, where there’s no big surge on orders, those customers are doing fine.”

Samsung said it may not launch a new Galaxy Note this year because it wants to streamline its product lineup. But if it does decide not to go ahead with a new Note, that would break a yearslong streak of successive annual launches of one of its marquee products.

It could have an impact on Samsung’s bottom line too, since the Note accounted for about 5% of its smartphone shipments in the past two years, according to data from International Data Corp. It likely accounts for an even more significant portion of its smartphone revenue, given that it’s one of the most expensive smartphones it sells.

“There is a massive chip supply problem for sure,” Patrick Moorhead of Moor Insights & Strategy told SiliconANGLE. “But I question if Samsung actually needs the Note line given the pen additions to its S21 line.”

For his part, Koh said it could be a burden for Samsung to unveil two flagship smartphones this year. “The timing of the Note model launch could be changed, but we seek to release a Note model next year,” he said.

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