Attention-Grabbing Headline of the Day: "Recession hits smartphone makers in the chips"

Link to August 20 San Jose Mercury News article.

Excerpt: The seemingly recession-proof smartphone is suffering from a side effect of the rough economy: Manufacturers simply can't build enough of the gadgets because chip makers that rolled back production last year are now scrambling to play catch-up.

The chip shortage means Apple's rivals are having trouble making enough phones to compete with the iPhone, a problem expected to persist through the holidays. It's also affecting wireless carriers, some of which are seeing delays in improving their networks, and it could even raise computer prices.

There isn't an across-the-board shortage of chips, but rather problems with certain components here and there. If just one of the 20 to 30 critical chips that go into a smart phone is unavailable, the whole production line screeches to a halt.

Sprint Nextel, for instance, couldn't satisfy demand for HTC's EVO 4G, the first phone to use a faster "4G" network, in parts of the country. Motorola said shortages of a wide range of chips, from memory to camera sensors to touch-screen controllers, are contributing to problems supplying enough of the new Droid X phones to Verizon Wireless. The carrier's online store reports a two-week wait for shipping orders.