Qualcomm is becoming a major customer of Samsung, tapping the Korean conglomerate to produce its next-generation Snapdragon processors for smartphones. Samsung replaces Taiwan’s TSMC, Qualcomm’s longtime manufacturing partner.
The move represents a role reversal for the two companies as Samsung was Qualcomm’s customer for years. Samsung used the San Diego-based company’s Snapdragon processors in its Galaxy smartphones until it started using its own Exynos processors.
Unlike Qualcomm, Samsung has chip manufacturing facilities as well as chip design capabilities. The company will be making the Snapdragon processors using the same 14 nanometer process it uses to make its own Exynos processors. The 14 nanometer process refers to the minuscule size of the cuts into the silicon. The smaller the cuts, the more chips can be made from each silicon wafer.
According to Korean news sources, Samsung will go back to using Qualcomm’s processors for at least some versions of its next-generation Galaxy smartphone, expected to be launched next month at Mobile World Congress. The new Galaxy phone is expected to use the Snapdragon 820, the same chip Samsung is manufacturing for Qualcomm.
The past year has been a difficult one for both companies. Samsung saw its mobile market share decline in the face of stiff competition from Apple at the high end of the market and from lower-cost Chinese manufacturers in mid-priced and entry-level markets. Qualcomm has also been challenged by China, where local semiconductor makers are supplying chipsets to emerging Asian manufacturers the company had hoped to count as customers. In 2015, the company said it would consolidate and streamline its operations, with those moves set to eliminate roughly 4,500 jobs at the company.
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