Qualcomm’s chip supply limitations affect Xiaomi and Realme smartphone production

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Qualcomm unveils Snapdragon 690, a mid-tier 5G smartphone chipset.
Image: Qualcomm

Qualcomm’s constrained supply of smartphone electronic components is affecting Xiaomi and Realme’s mobile device manufacturing efforts, reports Gizmochina. The fabless chipmaker recently revealed the global semiconductor shortage had undermined its ability to meet demand for its wireless products.

Major changes in the Chinese smartphone sector in 2020 also contributed to Xiaomi and Realme’s headaches.

In addition, Qualcomm has taken steps to diversify its supplier network to protect its business from future large-scale disruptions.

Xiaomi and Realme Need More Qualcomm Components

Xiaomi and Realme are struggling with a shortfall of critical handset parts amid a major realignment in their domestic marketplace.

During a recent press conference, Lu Weibing, president of Xiaomi China, commented on the corporation’s sourcing woes. He described the component scarcity affecting the vendor as an “extreme shortage.” The executive also indicated the crisis could lead to mobile phones becoming unavailable this year.

Xiaomi introduced its flagship Redmi K40 smartphone, powered by a Snapdragon 870 5G platform, last week.

Realme, a handset subsidiary of BBK Electronics Corporation, is struggling with stockouts of Qualcomm’s radiofrequency and power management ICs. The company intends to launch the Realme GT, equipped with a Snapdragon 888 chipset, worldwide on March 4.

Yicai, a Chinese media outlet, reported Qualcomm pushed its delivery dates to 30 weeks across its lineup. The publication also stated its Bluetooth component lead times had been extended to 33 weeks.

Increased Competition Contributed to Smartphone Shortage

The global shortage of raw materials and production capacity are the main reasons that smartphone components are scarce. However, handset parts had been in high demand recently because of increased competition in the Chinese wireless market.

Huawei, the segment’s former leading provider, began stockpiling components ahead of a September 15, 2021 change in international trade policies. That deadline passed, the firm would no longer be able to secure cutting-edge mobile device chips.

Simultaneously, the conglomerate’s competitors began ramping up their output to take advantage of its supply problems. As a result, Xiaomi expanded its handset sales by 32 percent year-over-year in Q4 2020. Oppo, another BBK company, increased its shipments by 10.7 percent annually in the same timeframe.

Qualcomm CFO Akash Palkhiwala said the changes kicked off by Huawei’s declining presence in the cellular industry grew its addressable market by 16 percent.

However, the increased competition within the smartphone space likely created an imbalance between demand and supply. The global chip shortage had the effect of exacerbating that disparity into a major sector-wide shortage. In fact, an unnamed industry analyst told Yicai that mobile CPUs, PMICS, and microcontrollers are widely out of stock at present.

Unfortunately, the worldwide semiconductor shortfall is too large a problem to resolve quickly. Nevertheless, Qualcomm has already moved to prevent similar issues from affecting its output going forward.

Qualcomm Expanding Production Capacity in Two Regions

DigiTimes stated that Qualcomm sought to forge new business relationships within the Taiwanese pure-play foundry sector last month. The firm was particularly interested in making deals with Bismaleimide-Triazine (BT) substrate providers to ensure the consistent output of 5G components. The corporation even planned to assign one of its vice presidents to solely work with its partners in the area.

Qualcomm also signed a $902 million supply deal with Samsung in February.

The chipmaker contracted the South Korean conglomerate to manufacture its Snapdragon X65 and X62 5G device modems. The company’s latest connectivity lineup boasts impressive download speeds, with the X65 topping out at 10Gbps. It intends for the series to power premium handsets and fixed industrial IoT networks.

Qualcomm is very smart to have taken a proactive approach to reinforce its supply chain. The partnerships it is establishing will enable it to follow its roadmap to become a globally dominant provider of 5G solutions. Its efforts should also help Xiaomi and Realme become bigger players in the wireless industry.

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