The chip shortage has now hit the smartphone industry, reports Associated Press, with Sprint Nextel unable to supply HTC's 4G phones because of shortages of ICs; Verizon short of supply of Motorola Droid phones for the same reason; and a three week wait at retail for the Apple iPhone 4.
The shortage started last autumn with some SDRAM parts going onto allocation and a number of standard analogue parts like op amps and converters on 20+ week lead-times.
Since then it has got worse, though there are signs now that some companies are stabilising lead-times.
"We continue to see challenges in procurement of components this quarter," says Cisco CEO John Chambers, "supplier lead times now appear to have stabilised, but are still longer than we would like."
Texas Instruments, which is putting in place enough new capacity to support $4bn in additional analogue revenues, says it's lead-times have stabilised.
The telecoms infrastructure equipment industry was one of the earliest industries to be hit. Earlier this month, Alcatel-Lucent CEO Ben Verwaayen complained: "It's an industry-wide, global problem that won't be resolved over the next three months."
While Ericsson claimed it had lost $400m as a result of component shortages.
The first industry to publicly complain about chip shortages was Nissan, which closed six car factories last month because of a shortage of chips, ordered from STMicroelectronics. Last month, ST said its lead-times were 'not shortening'.
It is clear that the IC companies cut back capacity too far in the 2008-2009 downturn.
In its Q2 earnings report NXP states: "Our wafer factory in Caen, France was sold in June 2009, and our production facility in Fishkill, New York was closed in July 2009, and in January 2010 we closed parts of our front-end manufacturing facility in Hamburg, Germany. We have also initiated process and product transfer programs from our ICN5 and ICN6 facilities in Nijmegen, the Netherlands, which are scheduled to close in 2010 and 2011, respectively."
In the same report NXP stated that capacity limitations meant that the company’s Q3 revenues would be flat with Q2's.
"They (NXP) now face a flat sales growth quarter in the traditionally busiest quarter of the year! How to shoot yourself in the foot in one simple lesson", comments Malcolm Penn, CEO of Europe's top semiconductor analyst company, Future Horizons.
Having failed to invest in the downturn - traditionally the best time to invest in new capacity - now companies are reluctant to invest during the upturn - which is traditionally the worst time to invest.