Samsung – Internal or External?
Only a few smartphone brands have the wherewithal to develop and use their own application processors. Samsung (005930.KS) does and Apple (AAPL) has been doing it since 2010, while Google (GOOG) has its “Tensor” AP that it has recently used and Chinese brand Oppo (pvt) is in the throes of an AP development project, but most smartphone brands settle on one of the few AP producers, particularly Qualcomm (QCOM), Mediatek (2454.TT), UniSoc (state), or HiSilicon (pvt), or mix and match when necessary.
AP processor choice is a mix of price, performance, and availability that plays out in the year before models are released, with most consumers oblivious to what is running their smartphone. Brands with models that vary widely in price, have to sacrifice performance for lower priced models, sometimes using an AP from an earlier generation in order to maintain margins within that price tier, but when it gets to high end flagship phones, the competition is fierce and processors can become a positive or negative to consumers.
Samsung went through such a scenario with the Galaxy S22, where it uses its home-grown AP (Exynos) processor in Europe and Qualcomm’s Snapdragon chipset in the US and the rest of the world, something Samsung has been doing for years, although at times Samsung gets even more country specific as to which AP they use. The Exynos processor, which Samsung designed, had some speed and power issues this year that caused a bit of a ruckus when compared to those same phones that used a Qualcomm Snapdragon AP, and recent indications from sources in Korea seem to indicate that Samsung is considering not using its own Exynos Ap in any of the Galaxy S23 flagship line to be released next year, regardless of its regional destination.
As the Samsung mobile division makes such decisions, and is ultimately responsible for the success of the smartphone line, regardless of whether it is the fault of the processor, we expect cost considerations were less important than another ping to Samsung’s smartphone reputation. But this potential decision leads us to consider why Samsung has mixed processors on its flagship phones in previous years. Understandably it is likely less expensive for Samsung to use its own processor in mid to low-priced phones, but why use it in flagship phones based on destination? We have not been able to come up with a reasonable answer other than Samsung is trying to promote the Exynos processor whenever possible and the possibility that a self-designed processor will allow certain features to be enhanced, but we have been unable to understand (if that is the case) why Samsung would limit that to certain countries.
But Samsung’s AP design division is not taking the potential snub lying down and has split the processor design team in two, with one group working toward the development of a processor for computing and AI, and the other working toward the development of a processor specifically designed for communication applications. Additionally the communications design team will receive input directly from the mobile division, allowing for a more ‘smartphone specific’ design. We expect the reorganization will do little to change things for the Galaxy S23 line, but should have a positive effect on the S24 (2024), but even with Samsung’s massive resources there are a lot of moving parts to creating an AP that can outperform all other mobile application processors, and there are also questions as to how much Qualcomm being a customer of Samsung’s semiconductor business influences such decisions. Ideally we expect Samsung would like to equip all of its smartphones with its own AP, but that has proven to be a difficult task for everyone other than Apple who has been at it for over 12 years and sells only top price tier phones.
AP processor choice is a mix of price, performance, and availability that plays out in the year before models are released, with most consumers oblivious to what is running their smartphone. Brands with models that vary widely in price, have to sacrifice performance for lower priced models, sometimes using an AP from an earlier generation in order to maintain margins within that price tier, but when it gets to high end flagship phones, the competition is fierce and processors can become a positive or negative to consumers.
Samsung went through such a scenario with the Galaxy S22, where it uses its home-grown AP (Exynos) processor in Europe and Qualcomm’s Snapdragon chipset in the US and the rest of the world, something Samsung has been doing for years, although at times Samsung gets even more country specific as to which AP they use. The Exynos processor, which Samsung designed, had some speed and power issues this year that caused a bit of a ruckus when compared to those same phones that used a Qualcomm Snapdragon AP, and recent indications from sources in Korea seem to indicate that Samsung is considering not using its own Exynos Ap in any of the Galaxy S23 flagship line to be released next year, regardless of its regional destination.
As the Samsung mobile division makes such decisions, and is ultimately responsible for the success of the smartphone line, regardless of whether it is the fault of the processor, we expect cost considerations were less important than another ping to Samsung’s smartphone reputation. But this potential decision leads us to consider why Samsung has mixed processors on its flagship phones in previous years. Understandably it is likely less expensive for Samsung to use its own processor in mid to low-priced phones, but why use it in flagship phones based on destination? We have not been able to come up with a reasonable answer other than Samsung is trying to promote the Exynos processor whenever possible and the possibility that a self-designed processor will allow certain features to be enhanced, but we have been unable to understand (if that is the case) why Samsung would limit that to certain countries.
But Samsung’s AP design division is not taking the potential snub lying down and has split the processor design team in two, with one group working toward the development of a processor for computing and AI, and the other working toward the development of a processor specifically designed for communication applications. Additionally the communications design team will receive input directly from the mobile division, allowing for a more ‘smartphone specific’ design. We expect the reorganization will do little to change things for the Galaxy S23 line, but should have a positive effect on the S24 (2024), but even with Samsung’s massive resources there are a lot of moving parts to creating an AP that can outperform all other mobile application processors, and there are also questions as to how much Qualcomm being a customer of Samsung’s semiconductor business influences such decisions. Ideally we expect Samsung would like to equip all of its smartphones with its own AP, but that has proven to be a difficult task for everyone other than Apple who has been at it for over 12 years and sells only top price tier phones.
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