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Mobile application processors

Samsung to supply mobile chips to Xiaomi, Oppo; to rank 3rd in AP market

Nov 02, 2020 (Gmt+09:00)

Samsung Electronics Co. is expected to supply its Exynos mobile processor chips to China’s two leading handset makers, Xiaomi and Oppo, next year as the South Korean tech giant aggressively seeks to expand its presence in the global application processor (AP) market.

The inclusion of Xiaomi and Oppo, the world’s third- and fifth-largest mobile phone manufacturers, respectively, as Exynos chip clients will push the Korean company to third in global AP ranking from its current fourth position.

Asked if the chips will be used in handsets made by the two Chinese firms, a senior Samsung Electronics executive recently said “yes.”

Samsung is expected to begin shipping the mobile processors to be used in the two Chinese firms’ mid-range smartphones in the first half of 2021, according to industry sources on Nov. 2.

Samsung's mobile application processor brand, Exynos

A mobile application processor is a system on a chip (SoC) designed to support applications running in a mobile operating system environment.

The Korean tech giant generates the bulk of its profit from its basic memory chips and has been beefing up development of logic chips such as mobile processors, image sensors and automotive chips to diversify its business channels.

The company's flagship Exynos mobile chips power Samsung’s Galaxy series of smartphones and mobile phones of China’s Vivo Communication Technology Co., the world’s sixth-largest handset-maker.

Sources said Samsung will eventually be able to supply premium mobile chipsets to Xiaomi and Oppo for their high-end smartphones.

DIRECT COMPETITION WITH BIGGER RIVALS

Samsung’s latest move will bring it in more direct competition with its bigger rivals.

According to industry tracker Counterpoint Research, Qualcomm Technologies Inc. topped the global AP market with its 29% share in the second quarter, followed by Taiwan-based MediaTek Inc. at 26%. China's HiSilicon Technologies Co., an affiliate of Huawei Technologies Co., ranked third with a 16% market share. Samsung was the world's fourth-largest mobile AP maker along with Apple Inc. with a 13% market share.

Qualcomm’s pricier Snapdragon 875 chips and US restrictions on Huawei have also pushed Xiaomi and Oppo to diversify their source of procurement to Samsung, according to industry officials.


Samsung said over the weekend it will unveil a new mobile chipset, the Exynos 1080, on Nov. 12 as it aims to further expand its non-memory system LSI business.

Samsung’s strong interest in the non-memory business began in early 1997 when the company named then-Vice President Chin Dae-je to take charge of its LSI business after turning the firm into the world’s top DRAM memory maker. Samsung has also hired Kang In-yup from Qualcomm, and John Yong-in Park from Texas Instruments to strengthen its LSI business.

Samsung’s System LSI business saw a 27% rise in shipments last year, according to Counterpoint Research.

ACTIVE FOUNDRY SPENDING

Samsung is also known to be spending 10 trillion won ($8.6 billion) a year to develop chip foundry technology and purchase related equipment to close in on its bigger rival Taiwan Semiconductor Manufacturing Co. (TSMC).

The Korean company was a latecomer to the foundry industry and initially lacked the extensive relationships with existing global fabless companies enjoyed by frontrunner TSMC.

In recent years, Samsung Vice Chairman Jay Y. Lee has repeatedly shown his dedication to the system semiconductor business.

In April 2019, Lee said the company would inject 133 trillion won ($112 billion) into its LSI operations to become the world leader in both the memory and system chip businesses.

The industry expects Samsung’s LSI business to post an operating profit of 1.6 trillion won on revenue of 17 trillion won this year, up 32% and 16.3%, respectively, from 2019.

Write to Jeong-Soo Hwang, at hjs@hankyung.com

In-Soo Nam edited this article.

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