Qualcomm, the biggest supplier of mobile microprocessors worldwide (particularly for Android devices), is seriously struggling to keep up with an increasingly high demand for its chips now that the COVID-induced sales drop has begun righting itself. Biden recently announced he would seek $37 billion in funding for chip manufacturers in the US, including Qualcomm, but it could take a long time before its effect reaches smartphone sellers and end consumers. Huawei’s ban from the U.S. market abruptly gave many rivals an opportunity back in 2019, and now in COVID’s wake, demand for Qualcomm processors seems to have flown completely out of whack.
“We have an incredible crisis in the supply chain. The shortage is impacting everything, and of course [is] impacting phones.” —CEO Cristiano Amon
The semiconductor shortage crisis is affecting more than just Qualcomm (and smartphones), but is hurting automobile and video-game console production as well. The pandemic hit tech industries worldwide as fewer jobs during lockdown meant less money for end consumers to spend on luxuries, but now sales are resuming—and suppliers are struggling to meet the rising demand.
Any supply chain has multiple levels with buffer stock piled at each level to prevent drops in sales in case it comes up short on any of its needed components. But once something drastic does happen to eat through those buffers (like the pandemic), it takes a dreadfully long time to re-establish enough stock to resume steady production flow.
Biden’s funding will surely help, but the process is slow, as Qualcomm only designs their processors and outsources their production overseas. They will have to forward the funding abroad to create new factories (called “fabs”) which cost billions and aren’t built overnight. Because of the difficulties of such an expansion, Cristiano Amon (Qualcomm CEO) predicts smartphone chip shortages will last well into late 2021, meaning it might prove particularly hard to get our hands on Qualcomm’s upcoming 5G 5-nanometer chip phones in the following months. For now, these include most US-sold models of the Galaxy S21 line-up, as well as the Xiaomi Mi 11.
