Chip Shortages Continue to Delay Smartphones

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The smartphone is not recession-proof, it turns out and its not because there’s any drop in the insatiable demand for the devices. It is because a chip shortage has left smartphone makers high and dry, causing delays in phones like the HTC EVO 4G and the Motorola Droid X.

Motorola told the AP that random shortages in memory chips, camera sensors and touchscreen controllers were contributing the two week backorder in the Droid X through Verizon.

The chip shortages are not across the board, but it only takes one chip out of the 20 or 30 used that make up a product to halt production.

Chip makers saw a slowdown in early 2009 and scaled back production. Now they are having trouble ramping back up. And, like other suppliers, chip makers are still reluctant to scale up because demand may fall in again in an uncertain economy.

The shortages may lead to higher prices in phones and computers but since phones are subsidized, consumers may not see the change.

Chip shortages are also impacting the phone networks. AT&T says it can’t expand its network as fast as it would like to keep up with new traffic from the iPhone because of shortages in network equipment. Two large AT&T suppliers, Alcatel-Lucent and LM Ericsson AB are both in tight supply. Cisco, is also battling short supply.
Apple, however, said the current shortages on the iPad and iPhone 4 are due to high demand and not chip shortages.

Source: The AP
Photo: Droid X

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