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Nokia expects chip shortage to ease in second half of 2022

Nokia, the Finnish telecom equipment maker mentioned that it expects global semiconductor shortage to ease later this year. It reported quarterly operating profit that overcame market expectations, boosted by solid demand for 5G gear. 

This strong performance leveled up its shares as high as 7%.

The rise of pandemic in 2020 also saw a semiconductor shortage in 2020. This affected a range of industries, including telecoms. Nokia mentioned that it expects the pressure to ease out by the end of 2022 and the first half of 2023. 

Pekka Lundmark, Chief Executive  of Nokia mentioned though they had constraints in the second quarter, the overall direction in the semiconductor seems positive at the moment. He also mentioned that if there were more components available, their order book would have been capable of a faster growth.

Disruption in supply chains led to rise in costs, eroding margins and forced companies to increase price.

Demand for chips is expected to fall when smartphone and PC sales cool at the later part of this year. 

Contrary to Nokia who faced shortage slightly in the quarter, Ericsson’s quarterly core earnings even missed expectations.

Report analysis by Citi asserts that Nokia is performing well in the face of inflation and supply chain risks.