SAN FRANCISCO / SHANGHAI (Reuters) – Qualcomm Inc is struggling to keep up with demand for its processor chips used in smartphones and devices because the disk shortage that hit the automotive industry for the first time has spread in the electronics industry, sources have in the industry told Reuters.
Samsung Electronics Co. Ltd., the world’s largest smartphone maker, is experiencing a shortage of Qualcomm’s application processors, the heart of smartphones, two people at suppliers of the South Korean giant told Reuters.
Demand for Qualcomm’s chips has risen in recent months as Android mobile phone makers seek to win customers’ abandonment of phones manufactured by Huawei Technologies Co Ltd due to US sanctions. Qualcomm has found it difficult to meet this higher-than-expected demand, in part due to a shortage of some subcomponents used in its chips.
One person at a Samsung supplier said that a shortage of Qualcomm chips is affecting the production of mid- and low-end Samsung models. The second person, at another vendor, said there was a shortage of Qualcomm’s new flagship chip, the Snapdragon 888, but did not say whether it would affect the production of Samsung’s high-end phones.
A spokesman for Samsung Electronics declined to comment. A Qualcomm spokesman on Wednesday pointed to public comments from executives in which they reiterated that they believe they can meet a fiscal forecast for the second quarter in February.
Separately, a senior executive at a top contract manufacturer for several major smartphone brands told Reuters that he has a shortage of a range of Qualcomm components, and that the shipping of devices will decrease this year. The executive spoke on condition of anonymity.
Last month, Lu Weibing, a vice president of Chinese manufacturer Xiaomi, lamented the crisis. “It’s not a shortage, it’s an extreme shortage,” he wrote on Weibo, China’s Twitter-like social network.
A huge increase in the demand for consumer electronics has caused a worldwide shortage of chips causing car factories to spin. The shortfall so far has largely focused on chips made with older technology, rather than the advanced phone processors that Qualcomm designs.
But Qualcomm’s limitations show how problems in one area of the complex chip supply chain can affect others and how rapidly changing market dynamics can drive up disk companies that have to draw up mass production plans years in advance.
“Our demand still exceeds supply,” Qualcomm CEO Cristiano Amon told investors at the company’s annual meeting.
Qualcomm’s flagship application processor, the Snapdragon 888, is still new. Important parts of it come from Samsung Electronics’ separate disk-making division and use a new 5-nanometer manufacturing process that is difficult to scale quickly.
A Samsung plant in Texas, which manufactures from Qualcomm’s radio frequency receiver, was also forced to suspend operations last month due to power shortages caused by winter storms, although it is unclear whether the effects of the outage have yet to reach smartphone makers. has.
OLDER TECHNOLOGY
Qualcomm’s entire range of application processors includes power management chips manufactured with older technology by companies, including China’s Semiconductor Manufacturing International Corporation and Taiwan’s Semiconductor Manufacturing Co.
“You need a complete kit,” said Stacy Rasgon, an analyst at broker Bernstein. ‘If you can not get it, you can not build whatever you want to build. Supply chains are global and very strictly integrated. It is tuned for efficiency but is less resilient. ”
Qualcomm is targeting the supply of these power management chips to its highly profitable Snapdragon 888 application processors to meet what Samsung’s foundries can build, but this is hurting the supply of lower-end Qualcomm application processors, sources said.
China’s Xiaomi acquires most of its chips from Qualcomm and Taiwan’s MediaTek Inc.
PANIC BUY
The shortage of chips, which has caused panic purchases, increases capacity and increases even the cheapest components of almost all microchips, industry experts said.
According to a common microchip unit chip from STMicroelectronics that originally cost $ 2, it now sells for $ 14, according to Case Engelen, CEO of Titoma, a contract designer and manufacturer.
Simon Wan, co-founder of Chinese robot vacuum cleaner brand Roborock, said the company’s chip suppliers are asking for larger deposits on chip orders. He pays to secure stock.
“Everyone places orders like crazy, when in fact they can’t even use up all their chips,” said Wan, who did not want to name his chip suppliers.
Smaller companies get more damage.
Fabien Gaussorgues, who runs an electronics factory in the southern Chinese city of Dongguan, said the situation had been deteriorating since December.
His company was on its way to manufacturing a smart home appliance designed by an overseas customer before the Chinese New Year. But a shortage of key chipsets from the Japanese Murata delayed the launch by three weeks, forcing him to eventually use a slightly weaker chipset as a replacement. Murata did not respond to a request for comment.
Meanwhile, some of its other clients have delayed projects indefinitely.
“We saw components where we see six weeks lead time, and then the week after that ten weeks, and then a week later it’s one 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, Shanghai Newsroom; Edited by Sayantani Ghosh, Jonathan Weber, Ana Nicolaci da Costa, and Peter Henderson