Samsung is taking more steps to avoid phone manufacturing bottlenecks

RAM and storage chips are not the only smartphone components in short supply these days. Samsung recently faced a shortage of display driver ICs (DDIs) for the Galaxy Z Fold 8. So, the South Korean firm is taking steps to avoid such shortages in the future and prevent manufacturing bottlenecks.

UMC has been the sole supplier of DDIs for the Galaxy Z Fold 8. When demand for the phone exceeded Samsung's expectations, the company urgently requested UMC to produce additional display chips. However, UMC refused the request because its 22nm production lines were already running at full capacity. Accepting the order would have meant delaying production for other clients.

As a result, Samsung had to cut its September production plans for Galaxy Z Fold 8 components by 10% and push that volume to October, which impacted sales and revenue. To avoid similar production cuts in the future, Samsung is actively reviewing a strategy to source DDIs from GlobalFoundries in addition to UMC.

Samsung is reportedly looking at GlobalFoundries' 22nm and 28nm production facilities in Germany and Singapore. If it proceeds with the plan, DDIs made by GlobalFoundries will likely be used in entry-level and mid-range Galaxy A series phones by the end of 2027.

The entire industry is currently facing a difficult situation due to the high prices of memory chips and processors. Because of these increasing component costs, Samsung and other brands were forced to increase phone prices, resulting in a 20% year-over-year drop in global smartphone sales during Q3 2026.

Despite lower phone sales, analysts predict this situation could actually benefit Samsung in 2027. Because Samsung and Apple sell a lot more higher-end devices compared to other brands, they can secure memory components more reliably than their rivals. So, they are well-positioned for the upcoming year.