Qualcomm is working closely with TSMC but is also looking at alternate contract manufacturers for a consistent supply of S4 chips, company executives said. TSMC competitors UMC and GlobalFoundries are now ramping up their own 28-nm manufacturing processes.
There is also heavy demand for 28-nm chips outside smartphones, Insight 64's Brookwood said. Graphics cards from Advanced Micro Devices and Nvidia are made using the process, which could complicate the supply environment, Brookwood said.
Nvidia in particular has been grousing about the 28-nm chip supply, Brookwood said. But for Qualcomm, moving a design to another foundry would take at least six to nine months.
Qualcomm is also the primary supplier for chips for Windows Phone devices from HTC, Nokia and other phone makers. Those phones primarily use single-core Snapdragon S2 chips, and Qualcomm does not have a supply problem with those chips, which are made with an earlier process.
In the second fiscal quarter of 2012, ended March 25, Qualcomm reported net income of $2.23 billion, growing 123 percent compared with the same quarter in the previous year. The company's revenue was $4.94 billion, up 28 percent year over year. The company's shipments of MSM chipsets, which includes Snapdragon, totaled 152 million units, growing 29 percent year over year.
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