Qualcomm struggles to meet chip demand as shortage spreads to phones: sources

Qualcomm struggles to meet chip demand as shortage spreads to phones: sources

News: Qualcomm struggles to meet chip demand as shortage spreads to phones: sources.

SAN FRANCISCO / SHANGHAI (Reuters) – Qualcomm Inc is struggling to keep pace with demand for its processor chips used in smartphones and gadgets as a chip shortage that first hit the auto industry spread to the electronics business, industry insiders shared Reuters with.

Samsung Electronics Co Ltd, the world’s largest smartphone maker, suffers from a shortage of Qualcomm application processors, the heart of smartphones. This was announced by two employees of the South Korean giant Reuters.

The demand for Qualcomm chips has risen sharply in recent months as Android cell phone manufacturers seek to win customers who are abandoning cell phones manufactured by Huawei Technologies Co Ltd due to US sanctions. Qualcomm has found it difficult to meet this above-expected demand, partly due to the lack of some sub-components used in its chips.

A person at a Samsung supplier said that a shortage of Qualcomm chips was affecting the production of mid- and lower-priced Samsung models. The second person at a different vendor said it lacks Qualcomm’s new flagship chip, the Snapdragon 888, but didn’t say if it affected the manufacturing of Samsung’s high-end phones.

A Samsung Electronics spokesman declined to comment. A Qualcomm spokesman on Wednesday pointed to public comments from executives reiterating that they believe they can hit a revenue forecast for the second quarter of the fiscal year in February.

Separately, a senior executive at a top contract manufacturer for several major smartphone brands told Reuters that a number of Qualcomm components were lacking and cell phone shipments would be discontinued this year. The executive spoke on condition of anonymity.

Last month, Lu Weibing, vice president of the Chinese mobile phone manufacturer Xiaomi, lamented the chip crisis. “It’s not a shortage, it’s an extreme shortage,” he wrote of Weibo, China’s Twitter-like social network.

An increase in consumer electronics demand has resulted in a global chip shortage that has shut down car factories. The shortage so far has mainly focused on chips made with older technology rather than Qualcomm’s advanced designs for phone processors.

However, Qualcomm’s limitations show how problems in one area of ​​the complex chip supply chain can spill over into another, and how rapidly changing market dynamics can trigger chip companies that must make plans for mass production years in advance.

“We still have a demand that is essentially higher than the supply,” Qualcomm’s new CEO Cristiano Amon told investors during the company’s annual meeting on Wednesday.

Qualcomm’s flagship application processor, the Snapdragon 888, is still new. Important parts of it come from Samsung Electronics’ separate chipmaking department and use a new 5 nanometer manufacturing process that is difficult to scale up quickly.

A Samsung factory in Texas that makes some of Qualcomm’s radio frequency transceivers was shut down last month due to power outages caused by winter storms. However, it is unclear whether the impact of this disruption can still be traced back to smartphone manufacturers.


Qualcomm’s full line of application processors includes power management chips made with older technology by companies such as China’s Semiconductor Manufacturing International Corporation and Taiwan Semiconductor Manufacturing Co.

“You need a complete kit,” said Stacy Rasgon, an analyst at Brokerage Bernstein. “If you don’t get it, you can’t build whatever you want to build. Supply chains are global and very tightly integrated. It’s designed for efficiency, but less resilient. “

Qualcomm is aligning the supply of these power management chips with its highly profitable Snapdragon 888 application processors to meet the needs of the Samsung foundries. However, this affects the supply of Qualcomm lower end of the range application processors.

China’s Xiaomi sources most of its chips from Qualcomm and Taiwan’s MediaTek Inc.

Panic buying

The chip shortage, which has led to panic buying, is squeezing capacity further and driving up the cost of even the cheapest components of almost all microchips, according to industry experts.

For example, a commonly used microcontroller chip from STMicroelectronics that was originally priced at $ 2 is now selling for $ 14, according to Case Engelen, CEO of Titoma, a contract designer and manufacturer.

Simon Wan, co-founder of Chinese robotic vacuum cleaner brand Roborock, said the company’s chip suppliers are asking for larger deposits on chip orders. He pays to keep stocks safe.

“Everyone orders like crazy even though they can’t even use all of the chips,” said Wan, who refused to name his chip suppliers.

Smaller businesses hurt more.

Fabien Gaussorgues, who runs an electronics factory in the southern Chinese city of Dongguan, said supply problems had worsened since December.

His company was well on the way to mass producing a smart home device designed by an overseas customer before the Chinese New Year. However, a shortage of key chipsets from Murata of Japan delayed the launch by three weeks and eventually forced him to use a slightly weaker chipset as a replacement. Murata did not respond to the request for comment.

Meanwhile, some of his other clients have postponed projects indefinitely.

“We have seen components that we see six weeks lead time and then a week after ten weeks and a week later a year,” he said.

Reporting by Josh Horwitz in Shanghai and Stephen Nellis, Hyunjoo Jin in San Francisco, Heekyong Yang and Joyce Lee in Seoul, Yimou Lee in Taipei, Pei Li in Hong Kong, newsroom in Shanghai; Editing by Sayantani Ghosh, Jonathan Weber, Ana Nicolaci da Costa and Peter Henderson

Original Source © Reuters

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