(Yicai Global) March 1 -- China’s mobile phone industry is facing a severe dearth of chips, as rapid growth in fifth-generation wireless network devices fuels demand yet production remains limited, smartphone maker Xiaomi said.

"Chips are becoming extremely scarce," Xiaomi President of China Region Lu Weibing said on his Weibo blog on Feb. 24.

"US chipmaker Qualcomm's semiconductors and small parts, including power supply and radio frequency devices, are out of stock," an insider at fellow phone maker Realme told Yicai Global.

And there is unlikely to be any improvement before the end of the year, an industry insider said. San Diego-based Qualcomm's delivery cycle has been extended to more than seven months and that of the UK's CSR’s bluetooth audio chips to more than eight.

The shortage of chips is partly due to the growing demand for all things 5G. A 4G mobile phone, for example, only uses one power management integrated circuit chip but a 5G one needs three.

It is also difficult to increase production. There were 191 production lines worldwide for the eight-inch wafers commonly used in cellphones in 2020, an increase of just three from 2016, according to Global Microelectronics Market Data.

Many mobile phone manufacturers, such as Huawei Technologies and Oppo Mobile Telecommunications, are also stockpiling chips and other components, intensifying the imbalance between supply and demand, an industry insider said.

The shortage will continue for one to three years under normal circumstances, said Li Rui, chief executive officer of Nuowei Consulting. The 4G industry will be hit first, followed by high-end 5 nanometer products, he added.

The average price of a multiple chip package is expected to increase by between 5 percent and 10 percent in the second quarter, and that of a low power double data rate chip is expected to rise by 7 percent to 12 percent, according to market analysis firm Sigmaintell. This will raise the cost of camera sensors, storage and other components.

South Korean Samsung's Austin plant in the US suffered a power outage amid the heavy snow, which has reduced the supply of certain types of integrated circuits and may drive up the price of Universal Flash Storage devices in the second quarter, Sigmaintell said.

Global sales of mobile phones will definitely fall due to a shortage of chips in the next two years, Li said. The launch of new models will not be delayed, but there will be less phones on the market and prices will react accordingly, he added.

Editor: Kim Taylor