Samsung eyes new mobile AP chip to take on Apple's iPhone

Samsung Electronics Co. and Apple Inc. have had a long rivalry in the global market for smartphones and other mobile devices. 

In terms of sales volume, Samsung has been leading the mobile phone market for years. In value terms, however, the South Korean tech giant has been lagging far behind its archrival.

Sandwiched between Apple and fast-following Chinese companies such as Xiaomi, Oppo and Vivo, Samsung says it’s now shifting into high gear.

During a meeting with the company's smartphone business executives last month, Samsung Vice Chairman and Co-Chief Executive Han Jong-hee urged them to focus on improving mobile phones' performance rather than striving to cut costs, according to Samsung officials and industry sources on Thursday. 

“Cost reduction is something that even latecomers like Chinese companies can do with ease,” said one Samsung executive.

Samsung has for years been nurturing its smartphone business by focusing on low-end models, led by its Galaxy A series, targeting price-conscious customers in emerging markets.

But the company is struggling with that strategy as it faces growing competition with Chinese players, which can make decent low-end models at lower costs.

In the premium segment, Samsung is also fighting an uphill battle.

According to industry tracker Counterpoint Research, Apple’s high-end line of iPhones accounted for 57% of the market, where a smartphone costs at least $400, as of the third quarter. Samsung’s share stood at 19%.

If the trend continues, Samsung could fall behind Apple even in the broader smartphone market, with some analysts forecasting Samsung’s overall market share at 20.2% versus Apple’s estimated 24.6% by the end of this year.

Last year, Samsung changed the name of its mobile phone business to the Mobile eXperience, or MX, division to value user experiences with its business focus on high-performance phones with advanced features.

“Samsung wants to regain consumer confidence by narrowing its gap with Apple,” said an industry official.

LAUNCHED AP SOLUTION DEVELOPMENT TEAM

As part of its year-end senior and mid-tier executive reshuffles earlier this month, Samsung newly launched a mobile application (AP) solution development team under its MX division.

The team will be in charge of Samsung’s development of a new AP processor chip that will be used exclusively for its flagship Galaxy smartphone series starting in 2025.

A mobile application processor, which works like the human brain in a smartphone, is a system on a chip (SoC) designed to support applications running in a mobile operating system environment.

Vice President Choi Won-joon, a semiconductor expert who previously worked at Qualcomm Technologies Inc., will lead Samsung’s new smartphone development.

The development of a new mobile AP chip is part of Samsung’s goal to get ahead of Apple by building its own technological ecosystem.

“With his appointment as Samsung’s new smartphone development head, Samsung wants to follow Apple’s strategy of using its own AP chips for iPhones,” said an industry analyst.

The US tech company, which previously secured mobile AP chips from suppliers such as Samsung and Intel Corp., started developing a processor, the Apple A series, in-house for use in iPhones and other consumer devices in 2011.

By establishing its own ecosystem covering both hardware and software, Apple made it possible for consumers to use a variety of its products with a single ID, providing seamless connectivity.

DX STRATEGY MEETING

Samsung’s Device eXperience (DX) division, which oversees the smartphone and home appliance businesses, on Thursday opened a two-day global business strategy meeting to work out a new smartphone strategy.

At the meeting, officials said that Samsung will explore ways to improve the performance of its foldable phones, commercialize new form factors such as rollable displays and streamline its smartphone lineup.

The company plans to unveil its new premium smartphone, the Galaxy S23, at an event in San Francisco in early February. 

The new smartphone, to be equipped with Qualcomm’s latest Snapdragon AP, is targeting young consumers, dubbed millennials and Gen Zers, according to Samsung.

Write to Jeong-Soo Hwang at hjs@hankyung.com
In-Soo Nam edited this article.