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6981 - Murata Manufacturing Co News Story

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Large Cap
Market Cap £36.68bn
Enterprise Value £34.45bn
Revenue £10.74bn
Position in Universe 19th / 3904

FOCUS-Qualcomm struggles to meet chip demand as shortage spreads to phones- sources

Thu 11th March, 2021 6:11pm
By Stephen Nellis, Josh Horwitz and Hyunjoo Jin
    SAN FRANCISCO/SHANGHAI, March 11 (Reuters) - Qualcomm Inc
 QCOM.O  is struggling to keep up with demand for its processor
chips used in smartphones and gadgets, as a chip shortage that
first hit the auto industry spreads across the electronics
business, industry sources told Reuters.    
    Samsung Electronics Co Ltd  005930.KS , the world's largest
smartphone maker, is experiencing a shortage of Qualcomm's
application processors, the heart of smartphones, two people at
suppliers for the South Korean giant told Reuters.
    Demand for Qualcomm's chips has soared in the past months as
Android phone makers seek to win over customers abandoning
phones produced by Huawei Technologies Co Ltd  HWT.UL  due to
U.S. sanctions. Qualcomm has found it hard to meet this
higher-than-expected demand, in part due to a shortage of some
subcomponents used in its chips.*:nL1N2K322A
    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.
    A Samsung Electronics spokesman declined to comment. A
Qualcomm spokesman pointed to public comments by executives on
Wednesday in which they reiterated they believe they can hit a
fiscal second quarter sales forecast given in February.
    Separately, a senior executive at a top contract
manufacturer for several major smartphone brands told Reuters it
was facing a shortage of a range of components from Qualcomm and
would cut handset shipments this year. The executive spoke on
condition of anonymity.
    Last month, Lu Weibing, a vice president for Chinese handset
maker Xiaomi, lamented the chip crunch. "It's not a shortage,
it's an extreme shortage," he wrote on Weibo, China's
Twitter-like social network.
    A surge in demand for consumer electronics has driven a
global chip shortage that has idled car factories. The shortage
has so far centered largely on chips made using older technology
rather than the advanced phone processors Qualcomm designs. 
    But Qualcomm's constraints show how problems in one area of
the complex chip supply chain can bleed into others and how
fast-changing market dynamics can trip up chip companies that
must set mass production plans years in advance.
    "We still have our demand basically higher than supply," 
Qualcomm incoming Chief Executive Cristiano Amon told investors
during the company's annual meeting on Wednesday.
    Qualcomm's flagship application processor, the Snapdragon
888, is still new. Key parts of it come from Samsung
Electronics' separate chipmaking division and use a new
5-nanonmeter manufacturing process that is hard to scale up
    A Samsung factory in Texas, which makes some of Qualcomm's
radio frequency transceivers, was also forced to halt operations
last month due to power shortages caused by winter storms,
though it is unclear whether the effects of that stoppage have
yet trickled down to smartphone makers.*:nL4N2KN161
    Qualcomm's entire lineup of application processors contain
power management chips made with older technology by companies
including China's Semiconductor Manufacturing International
Corporation  0981.HK  and Taiwan Semiconductor Manufacturing Co
 2330.TW .
    "You need a full kit," said Stacy Rasgon, an analyst with
brokerage Bernstein. "If you can't get them, you can't build
whatever it is you want to build. Supply chains are global and
very tightly integrated. It's set up for efficiency, but it's
less resilient."
    Qualcomm is directing supply of these power management chips
towards its highly profitable Snapdragon 888 application
processors to match what Samsung's foundries can build, but that
is hurting supplies of lower-end Qualcomm application
processors, sources said.
    China's Xiaomi  1810.HK  procures the majority of its chips
from Qualcomm and Taiwan's MediaTek Inc  2454.TW .
    The chip shortage, which has prompted panic buying, is
further squeezing capacity and driving up costs of even the
cheapest components of nearly all microchips, industry experts
    For instance, a commonly-used microcontroller-unit chip from
STMicroelectronics  STM.BN  originally priced at $2 now sells
for $14, according to Case Engelen, CEO of Titoma, a contract
designer and manufacturer.
    Simon Wan, co-founder of the Chinese robotic vacuum cleaner
brand Roborock, said the company's chip suppliers are asking for
larger deposits on chip orders. He's paying to ensure stock.
    "Everyone is placing orders like crazy, when in fact they
can't even use up all their chips," said Wan, who declined to
name his chip suppliers.
    Smaller companies are hurting more.
    Fabien Gaussorgues, who runs an electronics factory in the
southern Chinese city of Dongguan, said supply issues have
worsened since December.
    His company was on track to mass produce a smart-home device
designed by an overseas client before the Chinese New Year. But
a shortage of key chipsets from Japan's Murata  6981.T  delayed
the launch by three weeks, he said, forcing him to eventually
use a slightly weaker chipset as a substitute. Murata did not
respond to request for comment.
    Meanwhile, some of his other clients have delayed projects
    "We have seen components where we see a six-week lead time,
and then the week after it's ten weeks, and then a week later
it's one year," he said.

 (Reporting by Josh Horwitz in Shanghai and Stephen Nellis,
Hyunjoo Jin in San Francisco, Heekyong Yang and Joyce Lee in
Seoul, Yimou Lee in Taipei, Pei Li in Hong Kong, Shanghai
newsroom; Editing by Sayantani Ghosh, Jonathan Weber, Ana
Nicolaci da Costa and Peter Henderson)
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