It looks like the massive global semiconductor shortage is finally going to hit the smartphone industry in full, and the biggest name that will feel the heat is Qualcomm. According to a Reuters report Qualcomm is struggling to meet demand for its mobile processors, especially the flagship Snapdragon 888 SoC that powers some high profile phones like the Samsung Galaxy S21 series.
The flagship segment – powered by the Snapdragon 888 SoC – is where things stretch
However, Qualcomm’s problems are intertwined with Samsung as well, as the Korean electronics giant’s chipmaking division is responsible for shipping some key parts to Qualcomm. Plus, The 5nm manufacturing process on which the Snapdragon 888 is based has its own scalability limitations. In addition, Samsung’s Texas factory, which makes components such as high-frequency transceivers for Qualcomm, recently suffered an outage due to snowstorms in the area.
The HUAWEI factor
Another reason the demand for Qualcomm’s chips has suddenly skyrocketed is because of HUAWEI’s misfortune. As more and more people move away from HUAWEI smartphones – because they no longer offer access to key Google services like Gmail, Maps and Play Stores – the demand for Android phones with Qualcomm chips has increased. And that’s because HUAWEI has equipped many of its phones, especially the flagships, with their own HiSilicon Kirin processor family.
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As HUAWEI is losing its charm with buyers, the demand for phones with Qualcomm chips has increased
And now that these phones are no longer an attractive option for many buyers, the demand for phones powered by Qualcomm (and MediaTek) chips has suddenly seen a surge. In the high-end segment, this has directly weighed on the Snapdragon 888 SoC that powers flagships from Samsung and other Chinese brands like OPPO and Xiaomi, all of which are trying to fill the void that HUAWEI has left.
A tight supply chain is also to blame for this
Qualcomm’s new CEO Christiano Amon recently told investors that demand for processors outweighs supply. However, The shortage does not depend on a single factor, but on the entire semiconductor industry as a whole, in which the shortage of one component disturbs the equilibrium – the result of a tightly integrated global supply chain.
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The lack of a few components is causing ripples across the industry
For example, Qualcomm’s processors employ power management chips, but due to the shortage, the company is shifting inventory of those chips towards production of its flagship Snapdragon 888 SoC. While the strategy is solid from a financial standpoint, it has had a negative impact on the production of Qualcomm’s low-end and mid-range smartphone processors.
However, The situation may not improve anytime soon. And that’s because the semiconductor shortage has also triggered panic buying and prices have also skyrocketed for certain components. And when you consider how the supply chain reacts to such one-sided changes, the entire industry – including the domain of smartphones – has to deal with the shortage.
Check out the Galaxy S21 over at Samsung
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I’ve been writing about consumer technology for over three years, having worked with names like NDTV and Beebom in the past. Leaving the latest news aside, I’ve checked out my fair share of devices that range from smartphones and laptops to smart home devices. I’ve also interviewed tech managers and appeared as a moderator on YouTube videos talking about the latest and greatest gadgets.