In this and subsequent follow-on Supply Chain Matters blog commentaries, we will survey the recent financial and operational performance of some bellwether companies’ indicative of industry product demand and supply networks trending.  Our goal is to share indicators of how certain industries, companies and customers are faring during this unprecedented 2021 disruption.

We begin in high tech and consumer electronics, where two companies have often been kingpins to industry capabilities. One is certainly Samsung Electronics, the other is Apple. Both reported extraordinary financial and operational performance in their most recent quarters.

Semiconductor manufacturing

Samsung Electronics

Samsung not only produces end-item products such as smartphones, consumer electronic devices and household appliances, it further supplies major electronic components for its own branded along with other global based high-tech manufacturers, which include memory and microprocessor chips.

In late April, Samsung reported 2021 first quarter financial results that exceeded expectations. Among the highlights was total revenue growth of 18 percent with net profit rising 46 percent, an estimated $6.4 billion, amid increased multi-industry market demand for semiconductor chips and electronic components.

In its reporting, Bloomberg noted that this conglomerate: “has been riding a boom in stay-at-home demand for smartphones, PC’s, home appliances and cloud services.” However, the company lost out on semiconductor chip sales.

In February, a severe winter storm and subsequent multi-day freeze impacted wide swaths of the state of Texas. Samsung’s semiconductor facility located in Austin Texas is one of the largest and most advanced semiconductor manufacturing facilities in the United States. That facility was impacted for several days because of a multi-day outage of public utility electrical power. A senior vice president overseeing the company’s semiconductor fab business indicated to analysts that upwards of 71,000 wafers were affected by the production shutdown, with damage estimated to be between 300 billion to 400 billion Korean won.

As a result, operating profits for the memory unit were down 16 percent in the quarter. That stated, executives anticipate that with ongoing exploding demand in storage and computer server markets, the chip business unit will experience “significant” profit increases in the current quarter that ends in June.

The South Korea based vertical conglomerate is currently evaluating U.S. sites for investing in a reported $17 billion new fab facility to produce made-to-order chips, similar to industry leader TSMC.

Samsung was not immune to the ongoing chip supply shortfalls for its own end-products and warned that revenue and profits associated with its mobile phone division will decline this quarter because of supply shortages. None the less, product demand for smartphones resulted in a 65 percent increase in operating profits in the recent quarter. Further, this was the first time in five years that profits in the mobile business topped those of Samsung’s semiconductor unit.

Profits in the company’s consumer electronics business more than doubled in the recent quarter due to ongoing robust demand for appliances and TV sets. Here again, the company has been challenged by ongoing component and other material shortages. Reportedly during the recent quarter, there were continuing discussion with retailers and large buyers to determine which appliances with what features should be prioritized. Rebalancing of manufacturing remains ongoing.



Apple’s fiscal 2021 second quarter financial performance for the period ending on March 27 far exceeded expectations. Results were headlined with total revenues of $89.6 billion, up 54 percent, and net income of $23.6 billion. Greater China sales in the latest quarter nearly doubled to $17.7 billion.

Reportedly the global consumer electronics icon was able to avoid a microprocessor shortage in the March period. Senior executives cautioned that shortages would contribute to a decline in revenue in the current quarter steeper than the typical falloff following the March period. Overall iPhone revenues for the March quarter rose an astounding 65 percent to $47.9 billion, even as some of the company’s physical retail outlets had to suspend operations because of new waves of COVID-19 related restrictions. Wall Street now anticipates that the company’s full year profit could exceed $70 billion, a cash machine.  The company’s board recently authorized an additional $90 billion in stock buyback.

Apple’s supply chain capabilities stem from its network of vertically integrated contract manufacturers, including Foxconn Technology, and a stable of mostly Asia and China based component suppliers. The consumer electronic company further garners a lot of influence with Taiwan based semiconductor chip producer TSMC which reportedly controls in excess of 80 percent of the global chip market.

Apple provides volume, scale and influence. Unlike Samsung, the company must rely on its long-term supplier agreements. The consumer electronics provider further continues to be a savvy geo-political actor, given the ongoing tensions among the U.S. and China. The consumer electronic company is also under increased governmental scrutiny regarding business practices and market influence.

Forecasts indicate that the semiconductor shortage will continue for the rest of this year, and possibly into early next year. Shortages now extend beyond automotive to other industries including consumer electronics and appliances. Likewise, global transportation disruptions and exploding transportation cost increases are likely to extend thru the remainder of the year. Thus Apple, in its own way, faces ongoing challenges in keeping its supply network humming.


Two bellwether companies, each with different supply network strategies, each benefitting from ongoing COVID-19 related demands, and each with robust supply chain capabilities.


Bob Ferrari

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