The reason why many companies leave the smartphone market

The chip crisis has been going on for a long time, causing many smartphone companies to have difficulty and have to give up this business.
On May 9, Vingroup announced that VinSmart will close the television and mobile phone segments. Thus, the smartphone brand Vsmart stopped doing business after only 3 years, with the highest achievement being reaching the top 3 market share in a month in Vietnam market.

“I’m really surprised! VinSmart has entered the top 3 brands in Vietnam, and the top 20 in Asia by the end of 2020. They still have many opportunities in the near future when 5G networks are more popular in Asian countries. Asia, Africa, with cheaper usage,” said Neil Mawston, global head of telecommunications at research firm Strategy Analytics. Zing . VinSmart’s smartphone production may be hampered by a global chip shortage. When asked if a reason for the decision could be found, Mr. Mawston suggested that the global chip crisis could be a factor. Not just a single name, this crisis is making many smartphone manufacturers difficult. Many firms face difficulties in the global crisis hoảng “In terms of sales volume, VinSmart is still a small smartphone company in terms of scale. I think small firms are suffering the most because of the chip shortage crisis,” said Anshel Sag, an analyst at the company. Moor Insights & Strategy shared with Zing. The crisis of the semiconductor industry began with the outbreak of the Covid-19 epidemic. At that time, manufacturers thought that user demand would also decrease. However, the truth is the opposite. Due to long-term stay at home, people buy more technology. They buy more powerful computers, bigger screens to work from home. Children can buy new laptops to study at home. TVs, game consoles, and home appliances all increased sales. Chip companies like TSMC are working at more than 100% capacity to reduce the impact of the chip industry crisis. Photo: Reuters. The pandemic has turned into a month-long shopping festival. Therefore, the demand for chips also increased sharply. In the world, there are only a few outsourcing companies possessing modern technology to provide chips for smartphones. When every industry wants to increase production, the supply cannot meet. “Small firms are at a disadvantage because their scale is not large enough, leading to very thin profit margins. In the smartphone industry, scale is very important. It takes a lot of smartphones to be able to negotiate flexible prices. good conditions,” said Mr. Sag when asked about the difficulties of small smartphone manufacturers. In the first quarter financial report published at the end of April, Apple CEO Tim Cook also warned about chip shortages. The head of Apple said that it was not the demand that fell, but the lack of chip supply was the company’s biggest concern in the second quarter. Apple CEO also acknowledged that the company may face difficulties in the near future because of chip shortages. Photo: Cnet. “We think there will be a problem with supply. The chip shortage will mainly affect iPads and Macs. We also control our demand fairly well, but cannot comment on demand from vendors. different,” the Apple CEO told investors. Haven’t found a solution yet Currently, the smartphone market is only a game of a few big companies. One-time names like Sony accepted to downsize, selling only 400,000 units in the first quarter as they tried to keep the Xperia brand for a while. The chip crisis will make it even more difficult for small-scale smartphone companies in the near future. VinSmart has entered the top 3 brands in Vietnam, and the top 20 in Asia by the end of 2020. They also have many opportunities in the near future when 5G networks are more popular in Asian and African countries, with fees. cheaper to use. – Neil Mawston, Global Head of Telecommunications at research firm Strategy Analytics “When producing on a small scale, these companies will be the first affected by the lack of supply, increasing prices. It should also be remembered that suppliers still prioritize serving large, most important customers. theirs,” commented Mr. Anshel Sag. According to Neil Mawston, in addition to the main processor, another component, the screen, also increased in price by about 15%. This is also a consequence of the chip crisis, because every screen on a smartphone must have a control chip. “The pandemic, social distancing, and competition for supplies with other products such as tablets, laptops and electric vehicles have put the smartphone component supply chain in the most stressful state in years.” Mr. Neil Mawston shared. In a recent interview, Qualcomm CEO Cristiano Amon said that the chip shortage could last until the end of 2021. Therefore, difficulties are still ahead for many companies producing technology products. Cars are the manufacturing sector hardest hit by chip shortages. Technology manufacturers may also be affected in the near future. Photo: Automotive News. When asked more about VinSmart, Mr. Neil Mawston said that he was surprised because Vsmart smartphones have a certain market share in the domestic market. This analyst believes that this is one of the big advantages to be able to expand into the regional market. “Every major smartphone maker uses the domestic market as a platform to go regional or global. Apple’s iPhone was successful in the US and then expanded to other countries. The story is similar to Huawei in China. Korea, and Samsung in Korea. VinSmart is also open to growth in Southeast Asia. Therefore, we find it difficult to understand when they decide to stop producing smartphones, especially when the opportunity for 5G is very close, “Mr. Mawston said.