Technology

Qualcomm struggles to meet chip demand as shortage spreads to phones

Qualcomm Inc is struggling to sustain with demand for its processor chips utilized in smartphones and devices, as a chip shortage that first hit the auto trade spreads throughout the electronics business, trade sources advised Reuters.

Samsung Electronics Co Ltd, the world’s largest smartphone maker, is experiencing a shortage of Qualcomm’s application processors, the guts of smartphones, two folks at suppliers for the South Korean big advised Reuters.

Demand for Qualcomm’s chips has soared prior to now months as Android telephone makers search to win over prospects abandoning phones produced by Huawei Technologies Co Ltd due to U.S. sanctions. Qualcomm has discovered it exhausting to meet this higher-than-expected demand, partially due to a shortage of some subcomponents utilized in its chips.

One individual at a Samsung provider mentioned a Qualcomm chip shortage was hitting manufacturing of mid- and low-end Samsung fashions. The second individual, at one other provider, mentioned there was a shortage of Qualcomm’s new flagship chip, the Snapdragon 888, however didn’t say whether or not this was affecting the manufacturing of Samsung’s high-end phones.

A Samsung Electronics spokesman declined to remark. A Qualcomm spokesman pointed to public feedback by executives on Wednesday wherein they reiterated they imagine they’ll hit a fiscal second quarter gross sales forecast given in February.

Separately, a senior govt at a prime contract producer for a number of main smartphone manufacturers advised Reuters it was dealing with a shortage of a spread of parts from Qualcomm and would reduce handset shipments this year. The govt spoke on situation of anonymity.

Last month, Lu Weibing, a vice chairman for Chinese handset maker Xiaomi, lamented the chip crunch. “It’s not a shortage, it’s an extreme shortage,” he wrote on Weibo, China’s Twitter-like social community.

A surge in demand for shopper electronics has pushed a worldwide chip shortage that has idled automobile factories. The shortage has thus far centered largely on chips made utilizing older know-how fairly than the superior telephone processors Qualcomm designs.

But Qualcomm’s constraints present how issues in a single space of the advanced chip provide chain can bleed into others and the way fast-changing market dynamics can journey up chip corporations that should set mass manufacturing plans years prematurely.

“We still have our demand basically higher than supply,” Qualcomm incoming Chief Executive Cristiano Amon advised buyers throughout the company’s annual meeting on Wednesday.

Qualcomm’s flagship application processor, the Snapdragon 888, continues to be new. Key elements of it come from Samsung Electronics’ separate chipmaking division and use a brand new 5-nanonmeter manufacturing course of that’s exhausting to scale up rapidly.

A Samsung manufacturing facility in Texas, which makes a few of Qualcomm’s radio frequency transceivers, was additionally pressured to halt operations final month due to energy shortages attributable to winter storms, although it’s unclear whether or not the consequences of that stoppage have but trickled down to smartphone makers.

OLDER TECHNOLOGY

Qualcomm’s total lineup of application processors comprise energy administration chips made with older know-how by corporations together with China’s Semiconductor Manufacturing International Corporation and Taiwan Semiconductor Manufacturing Co .

“You need a full kit,” mentioned Stacy Rasgon, an analyst with brokerage Bernstein. “If you can’t get them, you can’t build whatever it is you want to build. Supply chains are global and very tightly integrated. It’s set up for efficiency, but it’s less resilient.”

Qualcomm is directing provide of those energy administration chips in the direction of its extremely worthwhile Snapdragon 888 application processors to match what Samsung’s foundries can build, however that’s hurting provides of lower-end Qualcomm application processors, sources mentioned.

China’s Xiaomi procures nearly all of its chips from Qualcomm and Taiwan’s MediaTek Inc.

PANIC BUYING

The chip shortage, which has prompted panic shopping for, is additional squeezing capability and driving up prices of even the most cost effective parts of almost all microchips, trade specialists mentioned.

For occasion, a commonly-used microcontroller-unit chip from STMicroelectronics initially priced at $2 now sells for $14, in accordance to Case Engelen, CEO of Titoma, a contract designer and producer.

Simon Wan, co-founder of the Chinese robotic vacuum cleaner model Roborock, mentioned the company’s chip suppliers are asking for bigger deposits on chip orders. He’s paying to guarantee stock.

“Everyone is placing orders like crazy, when in fact they can’t even use up all their chips,” mentioned Wan, who declined to title his chip suppliers.

Smaller corporations are hurting extra.

Fabien Gaussorgues, who runs an electronics manufacturing facility within the southern Chinese metropolis of Dongguan, mentioned provide points have worsened since December.

His company was on monitor to mass produce a smart-home machine designed by an abroad shopper earlier than the Chinese New Year. But a shortage of key chipsets from Japan’s Murata delayed the launch by three weeks, he mentioned, forcing him to ultimately use a barely weaker chipset as a substitute. Murata didn’t reply to request for remark.

Meanwhile, a few of his different shoppers have delayed tasks indefinitely.

“We have seen components where we see a six-week lead time, and then the week after it’s ten weeks, and then a week later it’s one year,” he mentioned. 

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