Qualcomm’s Processors Are in High Demand—and Short Supply
As the global chip shortage intensifies, Qualcomm is struggling to keep up with the demand for its processor chips that are used in consumer electronics.
Around this time last year, the market saw a huge uptick in demand for laptops, home desktops, and networking equipment as most of the world adapted to remote working. At the same time, automotive companies were ramping up chip demand for vehicle production. As work-from-home orders taper and automotive production crescendos in 2021, the semiconductor chip shortage has grown increasingly dire.
Chip shortage's effect on automotive stocks. Image used courtesy of Bloomberg and Yahoo Finance
One company that has been particularly affected by the shortage is Qualcomm, the California-based manufacturer best known for its wireless technology chips for smartphones. How has Qualcomm's chip production slowdown affected smartphone design and the telecom sector at large?
Demand Soars for Qualcomm Chips
As Android phone manufacturers try to win over consumers abandoning Huawei products, demand for Qualcomm’s chips has increased exponentially over the last few months.
Qualcomm has struggled to meet this demand, however, due to the shortage of some of the subcomponents used in its chips, meaning that smartphone manufacturers such as Samsung that rely on Qualcomm’s chips are also struggling to meet the demand for their own products.
In fact, Samsung, the world’s largest smartphone maker, has delayed the rollout of some models. More specifically, the South Korean tech giant is experiencing a shortage of Qualcomm’s application processors, which sit at the core of the Samsung phones.
Qualcomm Snapdragon 888. Image used courtesy of Qualcomm
According to Reuters, a source at Samsung said that the Qualcomm shortage was primarily impacting the production of low- and mid-range Samsung phones. Another source says that there’s also a shortage of Qualcomm’s flagship Snapdragon 888 chips but did not say whether this is what is causing problems for Samsung.
Factors in Slow Down: Snapdragon and Storms
The Snapdragon 888 is still a relatively new technology fabricated using the 5nm process, which is difficult to scale up quickly in response to spikes in demand. There’s also the fact that last month’s storms forced Samsung’s Texas chip plant, where some of Qualcomm’s radio frequency transceivers are made, to temporarily shut down operations.
Despite all of this, Qualcomm, which recently acquired NUVIA, is confident that it will hit its Q2 2021 sales forecast published in February following strong Q1 2021 results.
Qualcomm revenue streams by industry. Image used courtesy of Qualcomm
Roadblocks in Taiwan-based Production
The semiconductor shortage continues to dominate headlines with recent developments seeing TSMC auction off its excess wafer capacity at a 15-20% premium. Meanwhile, the Biden administration says that it is taking action to resolve the problem.
There were also fears that a drought in Taiwan, a major hub for chip production, could further fuel the semiconductor shortage. Despite Taiwanese officials saying that there’s enough water to last until May, Qualcomm’s incoming CEO believes that the worst of the crisis won’t be over until much later this year.
How have chip manufacturing holdups affected your design cycles? Have any of your projects been slowed down because of these global shortages? Share your experiences in the comments below.