Chip shortage could persist for another 2-3 years (President Hisense)
QINGDAO, China – The global chip shortage could persist for another two to three years before ending, the chairman of Hisense, one of China’s largest television and housewares makers, told CNBC.
Industries, from consumer electronics companies to automakers, face a shortage of semiconductors. This has led to a shortage of products such as game consoles and manufacturers are struggling to keep up with demand.
Chinese companies, including electric car makers, are also feeling the pinch.
Hisense Group Holding Co., a state-backed Chinese TV and home appliance maker, has also had some impact. Jia Shaoqian, chairman of the Qingdao-based company, said the cost of producing its products has increased but business remains normal.
“Hisense manufactures household appliances and consumer goods, and that requires relatively simple chips. Although supply is tight and costs have become higher, our business remains normal,” Jia said in Mandarin, according to a report. CNBC translation.
People visit the Hisense booth during the 2021 World’s Appliances and Electronics Expo (AWE) at the National Exhibition and Convention Center (Shanghai) on March 23, 2021 in Shanghai, China.
Chen Yuyu | China Visual Group | Getty Images
Jia said most of the chips are imported to China and the final products are produced there before they are exported. The United States and China have been locked in a trade war since the Trump presidency and these trade tensions continue today.
Semiconductors have become a point of tension between the two nations. The United States has sought to cut China’s largest SMIC chip maker from American technology.
A number of factors have led to the chip shortage, including an increase in demand for consumer electronics amid lockdowns around the world after the start of the pandemic. The United States’ trade war with China has also led companies to stockpile supplies.
Jia said if there were “no big problems” with global trade disputes, the chip shortage “could be resolved within two to three years.”
“Otherwise, if trade and economic sanctions between nations continue, it’s really hard to estimate,” Jia said.
Key leaders around the world expect the chip shortage to last until 2022. Some even believe it could extend beyond.
Enlargement of the United States and Europe
Hisense may not be well known to many consumers, but in recent years the company has sought to strengthen its brand in some of its key markets.
The company is a sponsor of the Euro 2020 and World Cup football tournaments. And it has the ambition to expand further outside of China.
So far, Hisense has sought to expand globally through foreign brand acquisitions and licensing agreements. The company also expanded its manufacturing overseas and opened research and development offices around the world.
Currently, around 40% of Hisense’s revenue comes from overseas. Jia said he hopes 50% of the company’s business will come from outside of China in the next three to five years.
The next part of the consumer electronics giant’s international push will focus on developing its own Hisense-branded products, according to Jia.
“This is the parent brand… In regions where existing brands are dwindling and where it reveals a void, we will fill the void with the Hisense brand,” Jia said. “In this way, we will develop our brand well, follow the pattern to develop from low end to mid-range until we can produce high-end products.”
There have been a handful of Chinese brands that have made it into the European market, but less so in the US In the smartphone business, companies like Xiaomi, Oppo, Vivo and Huawei have done well.
But the success of Chinese brands has also come under scrutiny from governments. The US government has accused Huawei of being a national security threat, a claim the company has repeatedly denied.
Jia said he believes negative sentiment towards Chinese brands will not stop Hisense’s efforts to expand globally.
“There is consumer misconception with Chinese brands, but these are not normally related industries that Hisense works in. We make home appliances. As long as we produce value at low cost, lead technology , let’s increase our services and quality, consumers will always like us – in China or in the world, ”Jia said.
“We have grown rapidly in the US and European market over the past few years without being affected, and it shows that consumers will be making choices with their pockets.”