According to reports, Qualcomm CEO Cristiano Amon said that it is expected that by the end of December, Qualcomm’s own supply problems will be substantially improved, and the company’s supply will be sufficient to meet demand before the second half of next year.

Qualcomm recently announced a bright fourth fiscal quarter. Not only did its earnings exceed Wall Street’s expectations, but it also gave strong guidance for the December quarter. One day later, Qualcomm’s stock price rose more than 12%.

Part of the reason why Qualcomm gives strong performance guidance is that Qualcomm is more optimistic than many competitors about global chip shortage expectations. For example, Apple said that the chip shortage will cost it more than $6 billion in the December quarter, Intel expects the shortage will continue until 2023, and AMD believes that the challenges related to chip supply will continue until the second half of 2022.

“We have always been cautious about the supply problems that Qualcomm will face in the future, but now it has passed.” Goldman Sachs analyst Rod Hall wrote in a research report on Wednesday.

Amon said that Qualcomm can increase chip revenue by 56% during the global shortage, thanks to the actions they took earlier this year, and the new capacity planned by the supplier months and years ago has also begun to be put into production gradually.

“The supply is in full accordance with our plan.” Amon said in an interview with the media on Thursday. “The scale is really beneficial. We solved this problem very early… We have formulated a production capacity plan, and it operates exactly according to our plan.”

So, why is Qualcomm successfully coping with the continuing global chip shortage? Why is it optimistic about next year?

Dual supplier mode: put eggs in two big baskets

Qualcomm’s largest single business is system-on-chip (SoC), which combines central processing and cellular connectivity, and is the most expensive and important component of Android smartphones. Almost all high-end Android smartphones use Qualcomm’s Snapdragon chips.

Amon said that Qualcomm’s smartphone chip sales in the fourth fiscal quarter increased by 56% year-on-year.

These chips are manufactured using the so-called leading node process, which can be called the most advanced capital-intensive chip manufacturing technology today. Leading node technology can make smaller transistors and then pack them more closely together to make chips with faster speeds and lower power consumption, thereby creating more popular smartphones.

Facts have proved that Qualcomm can use two different chip foundries for its foundry processors. At present, both Samsung and TSMC have the most advanced 5nm leading node technology, so Qualcomm has entrusted these two companies to produce chips at the same time.

“We are one of the few companies capable of multi-source procurement in the field of leading nodes. We have made many plans on the roadmap.” Amon said in April this year.

In contrast, companies like Apple rely on only one supplier (TSMC) to produce their own SoCs.

Wednesday, Amon attributed the main reason for the increase in sales of Qualcomm chips to this dual-supplier model. He also revealed that three of the company’s parts for sale use this dual-supplier model.

Amon said on an analyst conference call on Wednesday: “We took action very early and deployed many measures, including multi-source procurement and capacity expansion, and we had previously expected that by the end of 2021, our supply would be substantially improved.”