Only TSMC was excited… Shortage of mobile semiconductors, Samsung Electronics Qualcomm emergency

[MK위클리반도체] “What keeps me from sleeping? It’s a supply chain crisis these days. That’s the crisis we’re going through in the semiconductor industry.”

Cristiano Amon, Chief Executive Officer of Qualcomm, told CNET earlier this month in an interview with CNET, a media specializing in information technology (IT). “The supply chain is not properly prepared for the increase in IT demand,” he said. “This chip shortage is likely to continue until the second half of this year.”

At first, automotive semiconductors and now mobile semiconductors, the shortage of semiconductors is spreading all over the industry. Qualcomm, the world’s No. 1 mobile application processor (AP) that acts as the brain of mobile devices and the world’s number one communication modem chip, could not produce semiconductors as scheduled, and smartphone makers around the world were struggling to produce finished products one after another. Chinese smartphone makers, highly dependent on Qualcomm chips, are the first to scream.

The management of Chinese smartphone maker RealMe recently said, “Smartphone semiconductor inventory is running out,” local media reported. RealMe said that the inventory of power chips and communication frequency (RF) chips that manage power for smartphones has also run out.

Earlier, the general manager of the Xiaomi Redmi brand, Lu Weibing (corresponding to the president of Korea), said at the’Redmi K40′ presentation last month, “This year’s semiconductor is not just insufficient. It is extremely insufficient.” According to the industry, Qualcomm’s semiconductor delivery period has been extended to 30 weeks, and it is believed that it is delayed by up to 33 weeks depending on the product.

Samsung Electronics’ wireless division, which makes Galaxy smartphones, also has an emergency. Samsung Electronics is increasing the proportion of its own mobile AP, Exynos, in its flagship smartphone Galaxy S series. However, most low-end smartphones such as Galaxy A and Galaxy J have Qualcomm APs. The Galaxy A52 and A72 that Samsung Electronics will unveil through the Samsung Galaxy Awesome Unpack on the 17th are also known to be equipped with Qualcomm Snapdragon 720G APs and 750G APs.

The industry is concerned, as the lack of a single semiconductor chip will inevitably stop the production of specific modules altogether. For example, not only the mobile AP is mounted on the circuit board, but the power chip must also be inserted in order to complete the parts and send them to the smartphone assembly plant. Without any one chip, board modules cannot be delivered.

Semiconductor’panic buying’ of global IT companies is also becoming a reality. Reuters quoted Keith Engelen, CEO of Taiwanese IT parts design consulting firm Titoma, and said, “The commonly used STMicroelectronics general purpose microcontroller unit (MCU) semiconductor was $2 each, but now it has soared to $14.”

The first factor in the mobile semiconductor supply disruption is the missed forecast of demand. Mobile AP suppliers such as Qualcomm, Samsung Electronics, and MediaTek predicted the decline in demand for IT devices when the Corona 19 incident first broke last year and reduced their planned production targets. However, from the second half of last year, demand for IT devices exploded as the coronavirus digital transformation and suppressed consumption sentiment exploded.

Also, according to CEO Amon, the balloon effect among Chinese smartphone makers was also great. Last year, as the US imposed high-strength sanctions against Chinese smartphone company Huawei and Huawei’s market share fell, alternative companies such as Oppo, Vivo, and Xiaomi entered Huawei’s vacancy, increasing the number of parts orders, including semiconductors. Samsung Securities analyst Lee Jong-wook analyzed that “the semiconductor orders from OVX (Opo, Vivo, Xiaomi) are still strong, so the vicious cycle is repeating, including the phenomenon of double booking (duplicate orders) for semiconductors.

Above all, the global IT industry is paying attention to the’Apple Black Hole,’ which incessantly sucks up the world’s semiconductor production lines. Currently, global IT semiconductor production is dominated by Apple, Qualcomm, Nvidia, and AMD. They place orders for consignment production (foundry) to the state-of-the-art semiconductor production lines of Samsung Electronics and TSMC in Taiwan, and the products produced here are supplied to the global IT industry, including smartphone manufacturers, which is the structure of the semiconductor ecosystem.

According to the semiconductor industry, Apple is believed to account for more than 50% of TSMC’s 7-5 nanometers (nm·1 nm is 1 billionth of a meter) advanced microfabrication line. It preoccupied the high-tech semiconductor production line with the iPhone and iPad, which sell more than 200 million units a year. Qualcomm and Nvidia have secured some lines of TSMC and foundry lines of Samsung Electronics, but the volume is insufficient. In the industry, rumors have emerged that AMD, which has not guaranteed production at TSMC, is considering a foundry contract with Samsung Electronics. There are many observations that Qualcomm will entrust the production of the new Snapdragon AP, which will be released next year, to Samsung Electronics’ next 4-nano process.

Samsung Electronics, the second-largest foundry in the world after TSMC, is also unable to produce as planned the amount of core semiconductors for its strategic smartphones in response to overflowing orders from large customers around the world. It was found that the Samsung Electronics Foundry Division will not be able to produce the Exynos 2100, a mobile AP based on its own 5-nano process, as required by the Wireless Division of Samsung Electronics. The same goes for the Exynos 1080. Qualcomm, Nvidia, and Samsung Electronics’ own foundry are divided and allocated to a limited line, so they cannot produce according to the planned quantity.

Exynos 2100·1080 is the latest mobile AP developed by Samsung Electronics’ System LSI Division. The Exynos 2100 will be installed on the Galaxy S21 series, and the Exynos 1080 will be installed on the Galaxy A series and Chinese `Vivo` smartphones. The IT industry is holding the estimated sales volume of the Galaxy S21 in the world this year from 28 to 30 million units, of which 60% are expected to be equipped with Exynos 2100.

In the meantime, Samsung Electronics is also pushing for semiconductor production outsourcing. The plan is to entrust the outsourcing production of general-purpose semiconductors that can be made with older process technologies and focus on the production of advanced semiconductors of 5 nano or less. It is also considering that it will take at least 2-3 years for a large-scale expansion of a foundry plant that will produce semiconductors.

Samsung Electronics’ System LSI Division has already decided to entrust the 28-nano process-based camera image sensor to Taiwan’s UMC. It is known that mass production will begin soon. Samsung Electronics is also considering outsourcing the US Global Foundry (GF). An official in the semiconductor industry predicted, “If the shortage of semiconductors prolongs, will Samsung Electronics eventually knock on the door of TSMC, the largest rival in the foundry field?”

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