The economic slowdown in 2009 has affected smart phone manufacturers. Basically, they are not able to satisfy the consumers’ demands for gadgets because of the shortage of chips.

The chip shortage means that Apple’s competitors face serious problems as they do their best to compete with the iPhone. This is a real issue which affects wireless carriers, several of which are facing delay in enhancing their networks. This could also lead to an increase in the price of computers.

The actual problem remains in the shortage of some chip components, but not the shortage of chips as a whole. The unavailability of just a single chip out of the total 20 to 30 critical chips that constitutes a smart phone will stop the entire production.

For example, Sprint Nextel Corp. was not able to satisfy the demand for HTC Corp.'s EVO 4G which claims to be the foremost phone that uses a quicker "4G" network. Motorola Inc. faced scarcity of a number of chips, from memory to camera sensors to touch-screen controllers. All these accelerate the issues in providing adequate Droid X phones to Verizon Wireless. The online store carrier reports that they have to wait for two-weeks for shipping orders.

In a release, Linley Gwennap who is the president of research firm of The Linley Group said that "The semiconductor guys are really continuing to operate on all cylinders. Even where companies are facing shortages, they're saying 'Nah, I'm not sure I want to invest right now, because demand could turn down any minute.' That makes for a very difficult environment. In normal times, companies would be hiring, investing in more equipment and factories and trying to increase supply, but these aren't normal times."

The chips used in smart phones compete for production capacity with other chips manufactured at the huge factories run by contract manufacturers such as Taiwan Semiconductor Manufacturing Co. and United Microelectronics Corp.

Semiconductor Industry Association states that 2009 was the tough year for the chip manufacturers. The sales in February were only $14.2 billion which is down by 30 percent when compared to the previous year. The chip factories are running at 96 percent capacity, up from 56 percent as a result of the economic slow down.