SAN FRANCISCO -- Fabless chip vendor Qualcomm Incacknowledged Wednesday that it was turning to other foundry suppliers amid ashortage of 28-nm capacity at its longtime foundry partner, TaiwanSemiconductor Manufacturing Co Ltd (TSMC).
Qualcomm executives discussed the 28-nm capacity shortage ina conference call with analysts after reporting sales and profit for its fiscalsecond quarter that exceeded analysts' expectations. But Qualcomm executivesacknowledged that the 28-nm capacity situation may adversely impact its numbersin the next two quarters.
Paul Jacobs, Qualcomm's chairman and CEO, said the companywas seeing very strong demand for its Snapdragon S4 applications processor andother 28-nm products, but that 28-nm capacity is constrained.
"Although the manufacturing yields are progressing perexpectation, there's a shortage of 28-nanometer capacity," Jacobs said. Headded that Qualcomm could not secure enough 28-nm capacity to meet theincreasing demand for its 28-nm parts and that the constraints to supply areexpected to limit Qualcomm's revenue potential this year.
Jacobs acknowledged that Qualcomm was engaging with"several alternative sources" for 28-nm capacity. Jacobs did notidentify the alternative sources, but possibilities would presumably includeGlobalfoundries Inc, United Microelectronics Corp, and Samsung Electronics CoLtd. Jacobs said Qualcomm would increase its operating expenses to facilitateadditional 28-nm supply.
Jacobs said Qualcomm would also continue to use TSMC as afoundry for 28-nm devices.
"We're working closely with our partners to bringadditional capacity online," said Jacobs. He said Qualcomm doesn't expectto see a significant improvement in 28-nm capacity until the final calendarquarter of this year.
Taiwanese IT publication Digitimes said in a report Tuesdaythat Qualcomm and another stalwart TSMC customer, Nvidia Corp, approached otherfoundries about producing 28-nm chips for them because of tight 28-nm capacityat TSMC. The report cited unnamed sources at semiconductor tool makers.
Also Tuesday, TSMC Chairman and CEO Morris Changacknowledged that the foundry giant had issues with capacity shortage at 28-nm,but said that with new capacity coming online, "I do believe the worst isbehind us."
Though Qualcomm left its sales guidance for the fiscal yearunchanged, executives acknowledged that the 28-nm capacity shortage would havea negative impact on its outlooks for Qualcomm's fiscal third and fourthquarters.
Qualcomm (San Diego) reported sales of $4.94 billion for thequarter ended March 25, up 6% from the previous quarter and up 28% compared tothe year-ago quarter. The company reported a net income of $2.33 billion, up59% from the previous quarter and up 117% from the year ago quarter.
On a pro forma basis, excluding charges and special items,Qualcomm reported a net income of $1.76 billion, up 5% from the previousquarter and up 21% from the year-ago quarter. The company reported pro forma earningsper share of $1.01, up 4% sequentially and up 17% year-to-year.
Qualcomm's results for the quarter exceeded consensusanalysts' expectations, which called for sales of $4.84 billion and pro formaearnings per share of 96 cents, according to Yahoo Finance.
For the current quarter, which closes in June, Qualcomm saidit expects sales to decline to between $4.45 billion and $4.85 billion, whichwould represent a sequential decline of 2% to 10%. The range would represent anincrease of 23 to 34% compared to the year-ago quarter.
The low end of Qualcomm's outlook for the current quartercame in below consensus analysts' expectations, which called for $4.8 billion,according to Yahoo Finance.
For the fiscal year 2012, which closes late this year,Qualcomm continues to project sales of $18.7 billion to $19.7 billion, an increaseof 25 to 32% from fiscal 2011. The company increased its estimates for proforma earnings per share for the fiscal year of $3.61 and $3.76, which would beup 13 to 18% from fiscal 2011.
This story was originally posted by EE Times.
