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Chip developer Qualcomm is finding it increasingly difficult to meet the demand for its smartphone chips. With this, the prevailing chip shortages have claimed a new victim.

Suppliers of Samsung tell Reuters that the smartphone manufacturer is struggling with a shortage of processors from Qualcomm. Samsung and several other smartphone manufacturers see increased demand as consumers look for alternatives to the crippled Huawei. Huawei uses its own Kirin processors in many of its devices.

Extreme shortage

One of the contacts of Reuters says that the shortage mainly affects the cheaper models of Samsung. Another contact, however, states that Qualcomm is struggling to keep up with the demand for Snapdragon 888 SoCs. This is currently the fastest smartphone chip that Qualcomm offers. Samsung is not using that chip in its new Galaxy S21 flagship, but it does appear in many other high-end phones.

Other people confirm that it is becoming increasingly difficult for smartphone manufacturers to obtain the necessary chips. An insider at a supplier for many large smartphone manufacturers told Reuters that there was a clear shortage of Qualcomm chips. As a result, the production of smartphones had to be scaled back. Lu Weibing of Xiaomi also describes the situation as “not a shortage, but an extreme shortage”.

Panic buying

Many manufacturers have started panic-buying chips in fear of shortages. This makes the shortages even bigger, which in turn affects the prices of chips. Even the cheapest chips are hit hard. Case Engelen, CEO of electronics company Titoma, gives a common microcontroller from STMicroelectronics as an example. Such a chip normally costs 2 dollars but now sells for no less than 14 dollars.

Chip shortage showing no signs of slowing down

The chip shortage has been going on for months. Car manufacturers have been particularly affected. At the start of the corona pandemic, they were forced to shut down a large part of their production lines. When they started up again later in 2020, their suppliers had to go along with that. However, chip production requires a somewhat longer run-up, which is why car manufacturers soon ran into shortages. Several car manufacturers have had to shut down parts of their production lines again.

It is not only car manufacturers who are facing shortages. Chip designers AMD and Nvidia, which depend on external manufacturers such as Samsung Electronics and TSMC for their chip production, can also barely keep up with demand. This is partly due to the increased demand for computer equipment, which is caused by the many home workers and the uplift in the gaming market. It is also due to the generally increased demand for microchips. Intel does not appear to be facing any problems, but that company operates its own factories.

Tip: ASML: increased chip demand will not stop