Urian Buenconsejo Tech 03.14.2021 23:Mar PM EDT

Qualcomm Supply Shortage Puts Samsung, HMD Global in Trouble: Why is the Chip Supply so Critical?

When the COVID-19 pandemic hit the world quite unexpectedly in 2020, it sparked a huge increase in demand for gadgets and other devices. With people stuck at home, technology was one of the largest industries that grew even bigger with the need for gadgets increasing and the supply remaining the same. Qualcomm is one of those suppliers that have reportedly been hit by the chip shortage.

Qualcomm Supplies Chips

According to an article by Reuters, the chip shortage led to some production issues to the companies that Qualcomm supplies with their chips. One particularly popular example is how the supply of the Snapdragon 888 has affected the low-end chipsets like HMD Global. Samsung is also reportedly affected by the lack of chips as it deals with a wide range of different tier of smartphones.

Meanwhile, per a TNW report, U.S. semiconductor companies reportedly have a 47% stake in the chip sales market worldwide. However, only 12% are actually manufactured within the United States. The Taiwanese Semiconductor Manufacturing Company or TSMC has reportedly announced its plans to invest $25-28 billion this 2021 in fabs or fabrication plants alone. To put things in perspective, the Arizona TSMC fab is now expected to process 20,000 wafers a month compared to its capacity of 1 million wafers in Taiwan and China.

U.S. Companies Affected by Trade Bans

Pinpointing the reason behind the whole semiconductor shortage is quite difficult, but Harvard Business Review pointed their fingers to a number of factors including the geopolitical complications that have occured with the trade of chips around the world. U.S. companies were also reportedly cut off from China's very own Semiconductor Manufacturing International Corporation due to the ban, which had a huge blow on how the companies are able to come up with replacements.

There are a number of factors that reportedly affect what is happening with the shortage of chips as of the moment, but the effects can be seen directly on how Qualcomm is struggling in supplying chips to companies like HMD, Samsung and a few more. Chips, in this day and age, is very important since technology has not only become one of the leading industries providing jobs and contributing to the economy, but also because chips in general are needed to make almost all of the basic gadgets being sold today.

Demand Increases Through Pandemic

The shortage in supply comes with an increase in demand, as not only has the pandemic made people stay at home more but actually work from home. Due to a number of people doing their jobs from the comforts of their home and without the office equipment with them, a number of these people have bought new computers, laptops and smartphones in order for them to do their jobs at home increasing the total demand for chip-using gadgets.