Qualcomm is in a bit of a pickle at the moment, as they are simply unable to keep up with the demand for their precious S4 chips. This is mainly because their foundry partner, Taiwan Semiconductor Manufacturing (TSMC) is unable to produce enough volumes of Qualcomm’s Snapdragon S4 chip based on the newer 28nm fabrication process. Qualcomm’s chips are being used heavily in almost all of the top-tier phones and tablets and they are the exclusive partners with Microsoft as well, supplying SoC for all the Windows Phone handsets. In order to ramp up manufacturing, Qualcomm has had to turn to United Microelectronics (UMC) and even their rival, Samsung, to satisfy the demand.
Desperate times call for desperate measures
UMC, also based in Taiwan, is said to start volume production of the 28nm silicon sometime in the fourth quarter of this year. UMC will also be supplying anywhere between 3,000 and 5,000 wafers per month, which accounts to roughly 20-30 percent of the monthly volume currently shipped by TSMC. Reports say that the chips have already been taped out and have passed verification, so it’s just a matter of time before volume production commences. There aren’t many details regarding the tie-up with Samsung though, so we still don’t know what percentage of chip they’ll be manufacturing. TSMC’s inability to satisfy the demand has led to a good monetary opportunity for Samsung and UMC. I don’t think Samsung is too thrilled about the fact that many OEM’s still prefer Qualcomm’s chips over their Exynos chips. In fact, their very own Galaxy S III uses a Qualcomm S4 chip in the US instead of the quad-core Exynos.
One way to sort out this shortage once and for all would be to invest in their own fabrication plant, which Qualcomm’s CEO, Paul Jacobs said is on the cards. He has reportedly said that Qualcomm hasn’t ruled out the fact about owning their own manufacturing plant. He also said that the chip giant would be meeting customers' volume requirements by the end of 2012.
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