The pandemic has had a significant impact on the chip market. It's now witnessing a global chip shortage the likes of which have never been seen before. Even though the major players in the industry are taking steps to improve the situation, the shortage is far from over.
Qualcomm may be one of the biggest suppliers of mobile chipsets but it's entirely dependent on third-party manufacturers. The company doesn't have its own production facilities so it has to secure manufacturing capacity at companies like Samsung and TSMC. Its latest deal with TSMC could spell trouble for Samsung.
TSMC grants an unprecedented favor to Qualcomm
Qualcomm has had its high-end chipsets manufactured by both Samsung and TSMC. It chose the latter for the 2019 and 2020 chips but returned to Samsung for the Snapdragon 888. It was reported last month that Qualcomm would also have its next-gen flagship processor manufactured by Samsung, despite rumors that it may shift back to TSMC.
It's not just the lack of available manufacturing capacity that's causing problems in the chip market. Packaging substrates and wafers are also in short supply. All of these issues are making companies evaluate their strategies so that they don't face any business disruption down the line.
Industry sources are now reporting that TSMC and Qualcomm are taking a big step to further cement their relationship. Despite the strain on its manufacturing capacity, TSMC has agreed to manufacture a batch of high-end 5G chips for Qualcomm on priority. Precisely what chips TSMC has decided to accommodate remains unknown but it's clear that this would be an unprecedented favor that the Taiwanese manufacturer would be extending to Qualcomm.
Has that favor been done at Samsung expense? Could this mean that Qualcomm would ultimately have its next-gen flagship chipset made by TSMC as well? Even if that's not the case, Samsung may also struggle to secure enough chipsets from Qualcomm for its new flagships next year.
The chip shortage has already forced Samsung to cancel the Galaxy Note 21. Since it maintains an Exynos/Qualcomm split among its flagships, lack of adequate supply from Qualcomm might also force Samsung to adjust its product lineup in 2022.
