November 22, 2024

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[THE INVESTOR] Samsung Electronics has decided to reduce its reliance on Qualcomm chips for next year’s Galaxy S9 in an apparent tit-for-tat against the US chipmaker for making new foundry orders with its Taiwanese rival TSMC only, industry sources said on Aug. 21.

Samsung usually uses Qualcomm chips for almost half the shipments of its flagship S phones, while the remaining half is secured from its own chip-making unit. 

But for the upcoming S9, sources said, Qualcomm chips will make up less than 40 percent of the total shipments.

The latest decision comes after Qualcomm chose TSMC over Samsung as the sole producer of its next-generation 7-nanometer mobile processor.

Samsung and Qualcomm have maintained a close partnership in recent years. Qualcomm’s Snapdragon 820 and 821, which were fitted in Samsung’s Galaxy S7 and Galaxy Note Fan Edition, respectively, were built based on Samsung’s 14-nanometer chip technology, while the latest Snapdragon 835, which powers the current S8, uses Samsung’s 10-nanometer technology.

But TSMC, the world’s largest foundry firm, won the latest deal for the 7-nanometer chip as it succeeded in completing the manufacturing technology earlier than Samsung.

“Taking advantage of its status as a key client, Samsung is putting pressure on Qualcomm for future deals,” said an industry source.

Samsung’s local suppliers are also adjusting their production schedule for the S9 to reflect the reduced use of Qualcomm chips. For instance, Samsung plans to feature a substrate-like PCB, an advanced circuit board technology that houses components vertically to allow more internal space within the device, for the S9 phones running on its own Exynos chips only, and the suppliers are said to be working on 60 to 70 percent of the total shipments.

By Kim Young-won (wone0102@heraldcorp.com)