Qualcomm smartphones are the next devices to get hit by chip shortage
At least it’s not bitcoin miners —
Qualcomm faces pandemic shortages, Huawei’s sanctions, and Texas power problems.
We’ve already seen the global chip shortage hit cars, computers, and consoles. Up next, Qualcomm? A new report from Reuters gathers lots of quotes from the mobile industry that all basically say, “Yep, we’re running out of chips.”
Qualcomm has a lot working against it right now. First, like everyone in the electronics industry, the pandemic increased demand for all sorts of work-from-home gadgets and entertainment products while also occasionally forcing the shutdown of the factories that make those items.
Additionally, Qualcomm has to deal with increased demand thanks to the ongoing sanctions against Huawei. Huawei’s HiSilicon division was one of Qualcomm’s few Android SoC competitors (along with Samsung’s Exynos line), and Huawei has long worked to cut all US chips out of its supply chain. The US sanctions against Huawei have made it unable to get a steady supply of chips, and its market share has plummeted (even in China). The companies moving in on Huawei’s old turf are all mostly Qualcomm houses that don’t have a problem shipping US chips, so demand is up.
Qualcomm’s third problem is the weather in Texas. Record cold in February brought down the state’s power grid for several days, and one of the many casualties was a Samsung Electronics foundry in Austin. The foundry produces $3.7 billion worth of chips a year and counts Qualcomm and Tesla among its biggest clients. Thanks to the power outage, though, the plant has been down since February 16, and it’s forecasted to continue to be down until mid-April. Reuters says it’s unclear if this extra problem has impacted smartphone manufacturing yet.
The report checks in with Samsung’s phone division, saying, “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.” Samsung previously warned of smartphone chip shortages back in January.
Next up, Reuters talked to “a senior executive at a top contract manufacturer for several major smartphone brands” (I’m going to take a guess and call this company “Foxconn”) and wrote that this anonymous company “was facing a shortage of a range of components from Qualcomm and would cut handset shipments this year.”
Xiaomi has chimed in, too, with Vice President Lu Weibing writing last month on Sina Weibo, “It’s not a shortage, it’s an extreme shortage.”
Since everyone in the mobile industry knows a shortage is coming, the result has been the mobile equivalent of hoarding toilet paper. Reuter’s report says that “panic buying” has gripped the industry, and that is “driving up costs of even the cheapest components of nearly all microchips.” Simon Wan, co-founder of the Roborock robotic vacuum company, told Reuters, “Everyone is placing orders like crazy, when in fact they can’t even use up all their chips.”