The Semiconductor Shortage Comes for Qualcomm, Sweeps Phone Industry

The semiconductor shortage has hit Qualcomm and the smartphone SoC manufacturer is reportedly having real trouble meeting orders across the globe. Qualcomm is just the latest company to be hit by this problem; CPUs, GPUs, automotive hardware, and LCDs have all been variously impacted over the past few months.

Qualcomm is getting hit right now for three reasons. First, globally elevated demand related to the ongoing COVID-19 pandemic. Second, increased demand related to the US-China trade war. Whatever else one thinks of Huawei, it represented one of a relative handful of competitors to Qualcomm in mobile. With Huawei cut off from US companies, other phone manufacturers are surging into the market it’s left behind. It turns out that a lot of those companies happen to use Qualcomm SoCs. Thus, Qualcomm’s market share has risen at exactly the same time people were buying more smartphones and tablets.

Third, it just so happens that Qualcomm builds a lot of hardware in Samsung’s S2 fab, located in beautiful, sunny, recently frozen Austin, TX. Trendforce reports “the Qualcomm 5G RFIC, Samsung LSI OLED DDIC, and Samsung LSI CIS Logic IC account for 30, 20, and 15 percent” of S2’s monthly production capacity. Qualcomm won’t get pinched by the downtime until Q2, and that 5G smartphone production could fall by as much as 30 percent this quarter. Overall Q2 production is only expected to fall 5 percent, however. It’s thought that manufacturers have enough hardware in stock to cover almost all of the gap, and that some companies will lean a bit harder on 4G models than they might have done otherwise.

The shortages are said to extend across Qualcomm’s entire product line, up to and including the flagship Snapdragon 888 SoCs. Some customers have sounded off about the shortage in dire tones. A vice president for Chinese manufacturer Xiaomi, Lu Weibing, wrote about the crunch on Weibo, saying: “It’s not a shortage, it’s an extreme shortage.”

Panic Buying, Not Demand, Could Be Driving Some Shortages

According to Reuters, some of the demand driving market scarcity is panic buying. Companies are afraid skyrocketing chip prices will prevent them from buying silicon in the future, so they are placing more orders now. This could lead to over-inflated inventories and supply gluts in the future. There’s a risk that the semiconductor boom could turn into a semiconductor bust in the future, especially if companies overbuild new capacity in preparation for demand that never actually existed.

There’s no word of any shortages related to Qualcomm chips impacting any upcoming US launches or product availability, at least not yet.

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