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Qualcomm could have own wafer fab in the future, if necessary

June 29, 2012

Qualcomm is the biggest chip supplier right now in the Android smartphone market, in part because its Snapdragon CPU became very popular thanks to the Nexus One and HTC’s phones back in 2010, and thanks to the fact that they are the biggest supplier for low-end smartphones as well. Add to that the fact that S4 supply can’t even satisfy demand this year, and you’ll realize that Qualcomm is in a pretty nice spot in the chip-making business right now.

Even though the S4 shortage is a nice problem to have because of the overwhelming demand, Qualcomm may consider making chips in the future in its own wafer fab because its partner TSMC can’t manufacture the chips fast enough. However, this doesn’t seem to be Qualcomm’s main priority right now:

It’s not something that’s high on our list of things that we want to do. But I wouldn’t rule it out completely,” the report quoted Jacobs as saying.

I’m sure Qualcomm is looking into this, though, and if they could actually have a competitive advantage over others by making its own chips, in the same way Intel has, the company would do it. If Qualcomm can’t achieve that, then it’s probably not worth the effort, and you need pretty big investments to adapt and upgrade the fabs as you move to new node processes, not to mention that you need to be big enough so it’s worth having your own wafer fab.

Qualcomm should be big enough for that, just like Intel and Samsung are, but is the company confident it will hold that spot in the future, as ARM chip competition intensifies? Cortex A15 chips are coming out soon, so it remains to be seen what kind of impact those will have on Qualcomm’s S4 processors.

In the meantime, Qualcomm has also approached Samsung to manufacture its chips, probably as a consequence of the shortage of S4 chips from TSMC. Intel has also been suggested as a possible foundry for Qualcomm. But to me that seems a lot less likely than Samsung making Qualcomm’s chips.

Even though Samsung and Qualcomm are competitors, they are also partners in other ways – Samsung is using Qualcomm chips in some of its own phones. On the other hand, I very much doubt Intel is going to manufacture ARM chips anytime soon, unless Apple agrees to let them do it for them, which is also pretty unlikely. I also see Qualcomm wanting to become a bigger rival to Intel, by trying to encroach on their territory in the desktop space, so I don’t see Intel and Qualcomm partnering in any way anytime soon.