Qualcomm chip shortage to continue

By Kim Yoo-chul

Qualcomm said Thursday that its chip supply will not likely meet high demand from its major clients, including Samsung Electronics, LG Electronics and Pantech, dampening their hopes that chip supply would improve in the latter half of this year.

``We are still struggling to meet an explosive demand for the latest MSM8960 chipsets and other chip variants using a 28-nanometer processing technology, though the production yields of our chip products have steadily been improving,’’ said Kim Jong-ha, a senior executive at Qualcomm CDMA Technology Korea, Thursday.

Industry sources said Qualcomm has been in negotiations with three and four chip foundries other than Taiwan’s TSMC to increase supply of the chips and stressed ``visible results’’ to follow shortly. Kim was at the sidelines in the press conference to unveil Qualcomm’s updated business strategies at the Plaza Hotel, downtown Seoul.

Qualcomm had warned in April that it will have trouble meeting demand for some of its advance cellphone chips for the rest of the year due to manufacturing constraints and operating expenses will increase faster than expected.

The MSM8960 chipsets, which sport Long-Term Evolution (LTE) functionality, are currently being used in Samsung, LG and Pantech’s premium smartphones. Samsung’s Galaxy SIII LTE smartphone is also using the Qualcomm chipset.

But the Qualcomm executive said the chip shortage problem should soon ease, though he declined to say exactly when.

Qualcomm has attempted to appease its clients by offering an alternative in the form of the ``Fusion 2’’ chipset; however the manufacturer is conceding; ``We do expect to see some alternative non-Qualcomm chipsets being used to solve that issue as well.’’

The executive said it will commercialize its quad-core one chip solutions from the latter half of next year and a smartphone that uses the latest chip solution will be released in July next year.

Qualcomm plans to put the VoLTE functionality on its upgraded MSM8960 chipsets in a goodwill gesture to help local carriers smoothly push their VoLTE services from September this year.

Qualcomm sources said the existing MSM8960 chipsets don’t support the VoLTE functionalities, which is impossible for consumers using Samsung’s Galaxy R Style, LG’s Optimus LTE2 and Pantech’s VegaRacer2 models to experience the VoLTE service.

During the conference, Qualcomm pledged business expansion to Internet-connected TVs, PCs and tablets and reiterated its bullish plan to support Microsoft’s Windows 8 software.