Qualcomm is struggling to keep up with demand for its processor chips used in smartphones and other communications devices, as a chip shortage that first hit the auto industry spreads across the electronics business, industry sources tell Reuters. Samsung Electronics, the world’s largest smartphone maker, is experiencing a shortage of Qualcomm’s application processors, which are the heart of smartphones, according to two people at suppliers for the South Korean company.
Demand for Qualcomm chips has sharply increased in the past few months as Android phone makers seek to win over customers abandoning phones produced by Huawei Technologies because of U.S. sanctions. Qualcomm has found it hard to meet this higher-than-expected demand, in part due to a scarcity of some chip subcomponents.
One person at a Samsung supplier said a Qualcomm chip shortage was hitting production of mid- and low-end Samsung models. The second person, at another supplier, said there was a shortage of Qualcomm’s new flagship chip, the Snapdragon 888, but did not say whether this was affecting the manufacturing of Samsung’s high-end phones, according to Reuters.
A Samsung Electronics spokesman declined to comment. A Qualcomm spokesman pointed to public comments by executives last Wednesday; they said officials believe the company can hit a fiscal second quarter sales forecast given in February.
Separately, a senior executive at a top contract manufacturer for several major smartphone brands told Reuters a range of components from Qualcomm are in short supply and his company would cut handset shipments this year.
Qualcomm’s constraints show how problems in one area of the complex chip supply chain can spread into others and how fast-changing market dynamics can trip up chip companies that must set mass production plans years in advance. “We still have our demand basically higher than supply,” Qualcomm incoming Chief Executive Cristiano Amon told investors during the company’s annual meeting last Wednesday, Reuters reported.
The chip shortage has prompted panic buying, which is further squeezing capacity and driving up costs of even the cheapest components of nearly all microchips, industry experts said. For instance, a commonly-used microcontroller-unit chip from STMicroelectronics originally priced at $2 now sells for $14, according to Case Engelen, CEO of Titoma, a contract designer and manufacturer.
Simon Wan, co-founder of the Chinese robotic vacuum cleaner brand Roborock, said the company’s chip suppliers are asking for larger deposits on chip orders. He’s paying to ensure stock.
Smaller companies are hurting more. Fabien Gaussorgues, who runs an electronics factory in the southern Chinese city of Dongguan, said supply issues have worsened since December. Some of his clients have delayed projects 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 said.
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