A semiconductor shortage affected markets around the world, regardless of the sector. It’s the Brazil, of course, was not left out: most Brazilian companies faced some difficulty in acquiring electronic components from other countries. And the reflexes are directly seen in prices, as happened in the cell phone industry, which saw several increases in the value of smartphones and feature phones in recent quarters.
In terms of cell phones, Counterpoint Research’s main analyst for Latin America, Tina Lu, pointed to the Techblog that the shortage of chips and other components especially affected the Brazilian market in the Latin American bloc. The motivations center on the local manufacturing requirement and why the country is outside the big smartphone manufacturing centers like China and Vietnam.
“In the second and third quarter of 2021, Brazil was the most impacted country in Latin America,” he said.
Companies face difficulty in acquiring components
The impacts of the crisis are widely reported in Brazilian industry. The October Survey of the Electric and Electronic Sector carried out by the Brazilian Electric and Electronic Industry Association (Abinee) highlights that 67% of the companies interviewed reported difficulties in acquiring components. The problem becomes even more acute when you take into account the arrival of electronic components from other countries.
According to the survey, 59% of the companies consulted had difficulties in purchasing electronic components from Asia. The increase is five percentage points compared to September (54%). As for inputs from other regions, only 39% of respondents reported some kind of hindrance.
The survey also shows that seven out of ten companies reported that they use chips in their production. “28% of respondents reported that their suppliers did not pass any forecast of normality in the supply of semiconductor components,” says the study. Most companies expect that the situation will only improve after mid-2022.
Meanwhile, the crisis affects the production of Brazilian companies. On the one hand, 78% of companies stated that they perceived pressures above normal in the costs of components and raw materials. On the other hand, 41% of respondents are experiencing production and delivery difficulties and faced delays in production and delivery.
However, no manufacturer has reported a total stoppage of production due to lack of components since February, when the question was included in the survey.
And where did this whole crisis come from?
Part of these supply difficulties originated in 2020, when the COVID-19 pandemic began. In conversation with the TechblogJuliana Arouca, research analyst and consumer consultancy at IDC Brazil, recalled that the ports were closed due to the health crisis caused by the new coronavirus. Thus, semiconductor deliveries were slow to reach their recipients.
The analyst says that there was a global delay as, currently, these components originate from places in China. “The Brazilian market, like other markets, was short of supplies,” he said. As a result, companies have made adjustments in recent months to maintain their stocks, including sending goods from Brazil to other regions, such as the United States.
“These manufacturers are, yes, relocating between areas, for example, the United States, Brazil and Mexico, according to their priority market at the moment,” he said.
In addition, the relocation is linked to other demands that emerged in 2020. The last year was marked by the growth of the PC and tablet market as the world population joined the home schooling and to home office. Therefore, companies started to dedicate themselves to other product categories to the detriment of the mobile sector, as almost everything has been done at home in recent months.
“In fact, we see manufacturers making adaptations because the lack of connectors is a reality,” stated Arouca. “This is both for the smartphone market and for other markets in which these components support, such as, for example, the automotive market.”
In times of scarcity, prices go up
The reflection of all this is still felt in the wallet. And it’s not just in the pockets of consumers: companies are also getting bitter with the escalation of values to buy inputs, as reported by the Abinee survey. IDC Brazil’s ICT market analyst, Daniel Voltarelli, also highlights the same impact.
“One consequence of this is the increase in prices, which is not only due to the issue of semiconductors, but also to a scenario of global inflation,” he told the Techblog. “This is a global problem, but there are also issues of devaluation of the real against the dollar.”
Juliana Arouca followed the line of reasoning: “[é] that old rule of the supply and demand market prevailing”, he added. “Because we saw here a decrease in cell phone unit sales and an increase in the average price”. And the impacts are seen in numbers: in the first quarter, it was estimated an average cell phone price of R$ 1,290 (smartphones and feature phones). Then, in the second quarter, there was an 8% increase in the estimate.
“And now, for the third quarter, on top of that number for the second quarter, we have already increased expectations by 5%,” he said. “Meanwhile, our volume forecast has only been dropping from 2% to 3% in each of these quarters.”
Still, this does not mean that the result is exactly negative for companies. On the subject, the analyst raised two points: on the one hand, it can be said that the segment is generating even more value due to scarcity. But on the other hand, in terms of volume, you see a drop in the number of units.
“Scarcity does that,” he explained. “So it depends on the point of view. If you think that a smaller unit is a lower cost, even for the manufacturer the scenario is not so bad in terms of Ebitda [lucros antes de juros, impostos, depreciação e amortização].”
Even so, the reflexes of this crisis are present (and very clear). Take Apple as an example: according to Nikkei Asia, production of the iPhone 13 and other products was stopped for the first time in China’s New Year holidays, instead of working overtime. No wonder, when buying a 64 GB iPad Mini this Thursday (16), to São Paulo (SP) and through the Apple do Brasil website, delivery is expected from January 24 to 31, 2022.
Tina Lu also talks about the difficulties of other manufacturers. “Smaller companies can only hope to get some chipsets through open auctions,” he said. “Therefore, its cost has increased substantially.”
Tecnocast 187 – A global crisps crisis
The increase in electronics consumption during the pandemic is causing a shortage in the supply of semiconductors. Manufacturers were not prepared to meet this demand and this mismatch should affect the price of products in the coming months.
In the second block, we talked about 5G in Brazil with Juliana Zoia, who is a Motorola product specialist. Play and come with us!