SAN FRANCISCO / SHANGHAI (Reuters) – Qualcomm Inc. is struggling to keep up with demand for processor chips used in smartphones and devices as the shortage of chips affected it for the first time the auto industry is expanding into the electronics business, industry sources told Reuters.
Samsung Electronics Co. Ltd., the world’s largest smartphone maker, is experiencing a shortage of application processors from Qualcomm, the heart of smartphones, two South Korean giant suppliers told Reuters.
Demand for Qualcomm chips has risen in recent months as Android phone makers try to win over customers who abandon phones produced by Huawei Technologies Co Ltd due to US sanctions. Qualcomm has struggled to meet this higher-than-expected demand, in part due to the scarcity of some subcomponents used in its chips.
A person from a Samsung vendor said the shortage of Qualcomm chips was affecting production of mid-range and low-end Samsung models. The second person, at another vendor, said Qualcomm’s new flagship chip, the Snapdragon 888, was missing, but did not say whether that would affect Samsung’s high-end phone manufacturing.
A Samsung Electronics spokesman declined to comment. A Qualcomm spokesman noted on Wednesday the public comments of executives in which they reiterated that they believe they can meet the sales tax forecast for the second quarter of February.
Separately, a senior executive from one of the leading contract makers of several major smartphone brands told Reuters that it was facing a shortage of Qualcomm components and would cut phone shipments this year. The executive spoke on condition of anonymity.
Last month, Lu Weibing, vice president of Chinese phone maker Xiaomi, lamented the chip-breaking. “It’s not a hardship, it’s an extreme hardship,” he wrote on Weibo, the Chinese social network similar to Twitter.
An increase in demand for consumer electronics has caused the global shortage of chips that has left car factories idling. So far the shortage has largely focused on chips made with old technology rather than the advanced designs of Qualcomm phone processors.
But Qualcomm’s restrictions show how problems in one area of the complex chip supply chain can bleed in others and how rapidly changing market dynamics can lead to chip companies having to establish mass production plans. years before.
“We still have basically higher demand than supply,” Qualcomm chief executive Cristiano Amon told investors during the company’s annual meeting on Wednesday.
Qualcomm’s flagship application processor, the Snapdragon 888, is still new. Its key parts come from Samsung Electronics ’separate chip manufacturing division and use a new 5-nanometer manufacturing process that is difficult to scale quickly.
A Samsung plant in Texas, which manufactures some of Qualcomm’s radio frequency transceivers, was also forced to halt operations last month due to power shortages caused by winter storms, though not it is unclear whether the effects of this shutdown have yet been reduced to smartphone makers.
ANCIENT TECHNOLOGY
Qualcomm’s full range of application processors contains power management chips manufactured with prior technology by companies such as China Semiconductor Manufacturing Corporation and Taiwan Semiconductor Manufacturing Co.
“You need a complete kit,” said Stacy Rasgon, a Bernstein brokerage analyst. “If you can’t get them, you can’t build what you want to build. Supply chains are global and highly integrated. It is configured to obtain efficiency, but it is less resistant ”.
Qualcomm is directing the supply of these power management chips to the highly cost-effective Snapdragon 888 application processors to match what Samsung foundries can build, but this is hurting the supply of application processors Qualcomm low-end, sources said.
Xiaomi of China acquires most of its chips from Qualcomm and Taiwan MediaTek Inc.
PANIC PURCHASE
The shortage of chips, which has led to panic buying, further increases capacity and increases the costs of even the cheapest components of almost all microchips, industry experts said.
For example, a commonly used STMicroelectronics microcontroller unit chip with a starting price of $ 2 now sells for $ 14, according to Case Engelen, CEO of Titoma, designer and contract maker.
Simon Wan, co-founder of Chinese robotic vacuum cleaner brand Roborock, said the company’s chip suppliers are asking for larger deposits for chip orders. He is paying to secure stocks.
“Everyone places orders like crazy, when in fact they can’t even spend all their chips,” said Wan, who declined to name his chip suppliers.
Smaller businesses do more harm.
Fabien Gaussorgues, who runs an electronics factory in Dongguan city in southern China, said supply problems have worsened since December.
His company was on its way to mass-producing a smart home device designed by a customer abroad before the Chinese New Year. But the shortage of key chipsets from Japan’s Murata delayed the launch by three weeks, he said, forcing it 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 delayed projects indefinitely.
“We’ve seen components where we see a six-week delivery time, and then the next week is ten weeks, and then a week later it’s a year,” he said.
Reports 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 editorial staff; Editing by Sayantani Ghosh, Jonathan Weber, Ana Nicolaci da Costa and Peter Henderson