Two weeks ago we talked more about the semiconductor shortage, with a report that semiconductor demand is 30% above supply right now. Foundries are fully loaded, yet we want more gadgets than ever.
- Initially, the focus was on production issues for automobiles, with major makers reducing output as chip shortages hit, including the likes of Ford, GM, and VW.
Now, though, reports are that Qualcomm is struggling, as the shortage spreads to phones.
And it isn’t just for smaller makers with lower priority — Reuters reports even Samsung is affected, citing sources at Samsung suppliers. Quotes:
- “Samsung Electronics Co Ltd, the world’s largest smartphone maker, is experiencing a shortage of Qualcomm’s application processors.
- Demand for Qualcomm’s chips has soared in the past months as Android phone makers seek to win over customers abandoning phones produced by Huawei Technologies Co Ltd due to U.S. sanctions.
- Qualcomm has found it hard to meet this higher-than-expected demand, in part due to a shortage of some subcomponents used in its chips.”
So far, reports suggest all tiers of smartphones are affected. Reuters again:
- “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.”
- And another source at a contract manufacturer said it would cut handset shipments for a range of “major smartphone brands”.
- And Xiaomi’s Lu Weibing, prolific on Weibo, said “It’s not a shortage, it’s an extreme shortage,” back a few weeks.
For its part, Qualcomm isn’t saying much. In its recent earnings call, it acknowledged supply chain shortages, and said supply would be “normalized towards the later part of 2021.”
- Add in water shortages in Taiwan affecting TSMC (Nikkei), power outages and winter weather keeping Samsung Foundry, Infineon Technologies, and NXP Semiconductors offline in Texas (Tom’s Hardware), and a stretched supply chain starts to break.
What now?
- The March madness of mobile is seemingly oblivious to the chip shortages. Two flagships this week, mid-rangers from Samsung next week, more for the end of the month. Does any of it matter if we can’t buy them? There’s been no word of restrictions… yet.
- If there is a chip shortage, we do have some recent history on our side to tell us more. The pandemic affected phones like the Google Pixel 5 and 4a 5G; the iPhone 12 launched later than usual, and so on.
- And reaching further back, in 2012, TSMC couldn’t produce enough 28nm processors, and Samsung couldn’t make enough RAM in 2013 to supply all clients.
- That led to slower launches outside of home markets for smaller players, like Asus.
- What could happen? Well, you hope not what we’ve seen for the PS5 and Xbox Series X, which is to say aggressive shortages, aggressive reselling, and daily coverage about which retailer might get stock next.
- And, zero discounts, no accessories or credits included, and forced bundles in some cases.
- On the flip side, it might create a booming second-hand market?
Naturally, if you do have your eye on a smartphone, especially something in current production, maybe take your chance while stocks are available?
