Qualcomm sees 28-nm capacity crunch through 2012SAN FRANCISCO—Qualcomm Inc. said Wednesday (July 18) it expects supply of 28-nm chips to remain constrained until the end of the calendar year, despite acknowledging that the firm is now engaged with four foundries at that node.
Qualcomm executives said a tight supply of 28-nm capacity continues to drag on the company's sales amid strong demand for 28-nm devices. The comments on the state of 28-nm supply came following Qualcomm's fiscal third quarter financial report, in which the company came up short of analysts' estimates for sales and profit. Qualcomm (San Diego) also trimmed the high end of its guidance for the fiscal year, which closes in September.
Steve Mollenkopf, Qualcomm's president and chief operating officer, said Qualcomm expects the 28-nm capacity/demand gap to be alleviated by the end of Qualcomm's first quarter of fiscal 2013, which closes in December. "In the beginning of the [December] quarter we [will] still have a gap that we need to deal with, but it [will improve] throughout the quarter. We think it matches up toward the end."
Qualcomm said in April it engaged with other foundry suppliers amid a shortage of 28-nm capacity at its longtime foundry partner, Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC). Mollenkopf did not name the four foundries Qualcomm is now engaged with at 28-nm, but they would presumably include Globalfoundries Inc., United Microelectronics Corp. (UMC) and Samsung Electronics Co. Ltd., in addition to TSMC. Earlier this month, the Taiwan Economic News reported that Qualcomm signed UMC and Samsung to build its 28-nm chips.
"Right now we are supply limited," Mollenkopf said. "But it's going quite well in terms of bringing up additional sources."
Later, Mollenkopf added that 28-nm Qualcomm is seeing increases in both supply and demand for 28-nm products and that the company is "trying to match those two ramps." He added, "We are just in execution mode right now."
Paul Jacobs, Qualcomm's chairman and CEO, characterized the fiscal third quarter as a strong one overall, but acknowledged that it could have been better and said the company was "disappointed" it couldn't secure enough capacity to meet strong demand for 28-nm products.
"We'll work through this near term," Jacobs said. "We are looking forward to a very strong close to the calendar year."
Jacobs said adoption of 3G and 3G/4G technologies continues around the world, driving strong year-over-year growth in the company's chipset and licensing business in the fiscal third quarter. But he said estimates for growth of 3G/4G device shipments in the calendar year have moderated slightly. The company has also reduced its outlook for fiscal fourth quarter device shipments from previous estimates, Jacobs said.
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