Qualcomm's smartphone chip shortage continues

Smartphones using Snapdragon chips Qualcomm's Snapdragon chips are used in Android, Windows Phone and Blackberry devices

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Smartphone chip designer Qualcomm has confirmed it continues to be unable to meet demand for its latest generation of Snapdragon processors.

The US company's "28 nanometre" chips are used in bestselling Android devices including the Samsung Galaxy S3, HTC One X and Sony Xperia SX.

It first reported the shortfall in April, admitting it had underestimated appetite for the product.

The shortage is causing knock-on problems for manufacturers.

"It's slowing down production rates for a lot of the current Android models and is leading to a number of companies having to delay or scale down production of next generation models," Chris Green, principal technology analyst at Davies Murphy Group Europe, told the BBC.

"The problem is that if companies can't source enough of the chips they can't ramp up production lines to the speeds necessary to make them cost-productive."

"One company that I know has been affected is Asus and its Padfone."

The Taiwanese firm told the Verge tech site in May that it was experiencing shortages of Snapdragon S4 chips.

Qualcomm's disclosure coincided with its third quarter earnings. It reported $1.2bn of net income, 15% higher than the previous year.

Year end target

Qualcomm adapts processor designs by ARM Holdings and adds its own wireless data technologies, but outsources production to others.

After supplies from Taiwan Semiconductor Manufacturing Company fell short of demand, it sought alternative manufacturers and said it now had "four sources".

Asus Padfone The Asus Padfone is one of the products affected by the Snapdragon chip shortage

"We continue to be supply constrained of our 28 nanometre products but are ramping supply with multiple foundries," said the company's chief operating officer, Steve Mollenkopf, in a transcript of an analyst briefing posted to the financial news site Seeking Alpha.

"We currently project that we'll be able to closely match supply with demand as we exit the calendar year".

Future threats

Analysts also questioned Qualcomm's executives about Samsung's recent takeover of two businesses specialising in connectivity technologies - the mobile phone division of the UK's CSR and Sweden's Nanoradio.

Samsung's mobile phone chips - used in both its Galaxy handsets and Apple's iPhones - currently incorporate Qualcomm-designed elements. But the move could cost the Qualcomm business if its South Korean customer developed its own alternatives.

"I think the key way to combat that, as we've done all along, is to continue to drive the technology hard," responded Qualcomm's chief executive Paul Jacobs.

"We're driving it very rapidly on a number of areas... it used to be just the radio, but now it's also processor and graphics technology.

"Do people for their own internal uses have enough scale to invest at the same rate we do? The answer is generally no."

Corruption investigation

The firm also provided an update on a continuing US investigation into its business after a whistleblower's claims.

"[We] have informed the Securities and Exchange Commission and the Department of Justice of instances in which special hiring considerations, gifts or other benefits were provided to several individuals associated with certain Chinese state-owned companies or agencies," said Qualcomm's vice president of investor relations, Warren Kneeshaw.

"Based on the facts currently known, we believe that the monetary value of these benefits in aggregate to be less than $250,000, excluding employment compensation.

"We're continuing to co-operated with these investigations, but are unable to predict their outcome."

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