Key points
▶ Samsung Electronics reportedly asked Taiwan’s UMC for more than 10,000 additional wafers for display driver ICs (DDIs) to meet rising demand for foldable phones such as the Galaxy Z Fold8, but the request was rejected, Taiwan’s Economic Daily News reported on Nov. 2 (local time).
▶ Samsung had previously canceled some orders after anticipating a slowdown in the smartphone market. But sales later exceeded expectations, prompting the company to try to secure more supply. UMC said it would be difficult to accommodate additional orders because it had already allocated its production capacity to other customers.
▶ Samsung has been working to adjust production schedules to secure DDIs for the Fold8 since August. Industry observers say tight capacity at mature-process foundries is underscoring the growing importance of semiconductor supply-chain management.
Samsung Electronics is reportedly struggling to secure additional supplies of key semiconductors to meet rising sales of its foldable smartphones, as a Taiwanese foundry lacks the capacity to take on more production.
Citing industry sources on Nov. 2 (local time), Taiwan’s Economic Daily News reported that Samsung urgently asked UMC to produce more than 10,000 additional wafers for organic light-emitting diode (OLED) display driver ICs (DDIs), but the request was turned down.
UMC reportedly said it would be difficult to adjust production volumes at short notice because schedules for existing customers had already been set. Samsung and UMC have not commented publicly on the report.
Unable to meet demand after misjudging the market
A DDI controls the electrical signals sent to each pixel in a smartphone display, producing the screen’s brightness and colors. It is essential for driving OLED panels, and a shortage can affect finished-device production.
According to the Economic Daily News, Samsung had taken a cautious view of smartphone demand in light of rising memory-chip prices and global inflationary pressures, and canceled some of the production capacity it had reserved with UMC.
The situation later changed as smartphone sales exceeded expectations and demand increased for the Galaxy Z Fold8 and Z Flip8. Samsung tried to reclaim the capacity it had canceled, but UMC had already allocated it to other customers.
Supply pressures had begun to emerge in August. Samsung reportedly redirected DDI volumes secured for its 2027 products to Fold8 production and asked UMC for a “Super Hot Run,” a request for urgent priority production.
DDIs for the Fold8 are reportedly being manufactured using UMC’s 22-nanometer process.
Strong Fold8 sales prompt review of supplier diversification
Samsung said in August that sales of the Galaxy Z Fold8 had reached a record high, and some models were temporarily sold out on Samsung.com in the United States. The company is also reportedly considering increasing production by an additional 1 million units to meet demand.
Samsung is reportedly considering diversifying its DDI supply chain. It is looking into adding U.S.-based GlobalFoundries as another supplier.
The case highlights the growing importance of securing production capacity not only for advanced semiconductors but also for mature-process chips such as display driver ICs.
Mature processes are established manufacturing technologies, as opposed to cutting-edge processes, and are used to produce a wide range of chips, including DDIs, power management ICs (PMICs) and automotive semiconductors.
For smartphone makers, the traditional practice of adjusting chip orders in response to demand forecasts may become increasingly risky. Even if demand recovers after orders are canceled, it can be difficult to increase supply quickly if foundries have filled their production schedules with orders from other customers.
Long-term production contracts and supplier diversification are emerging as key priorities for manufacturers seeking to secure a stable supply of components.