Qualcomm, Inc. (NASDAQ:QCOM) To Produce Snapdragon 820 Exclusively From Samsung Factory


It is emerging that Qualcomm, Inc. (NASDAQ:QCOM) is ditching Taiwan Semiconductor Mfg. Co. Ltd. (ADR)(NYSE:TSM) for Samsung for the production of its Snapdragon 820 processor. As surprising as the move may seem, it isn’t totally strange because Samsung manufactures chips for a number of its direct competitors.

Qualcomm, Inc. (NASDAQ:QCOM) has typically produced its processors from TSM factory, but it appears to be shifting gears after the Snapdragon 810 that TSM manufactured turned out to be a serious disappointment.

Advanced manufacturing process

Qualcomm, Inc. (NASDAQ:QCOM)’s Snapdragon 820 will be based on Samsung’s advanced 14nm FinFET chip manufacturing process. Samsung is fond out claiming that its 14nm process is capable of producing chips that are more energy efficient and higher performance. For example, chips based on the process turn out to be 15% more efficient and 15% faster.

Samsung based its own Exynos 8 processor on the same 14nm FinFET process.

Campaigning for Samsung socket?

Samsung ditched Qualcomm’s Snapdragon 810 chip in its latest line of handsets. Part of the reason Samsung made the move is believed to be linked to the problems with Snapdragon 810. The chip was reported to be overheating, a problem that also hampered its performance.

Perhaps producing Snapdragon 820 exclusively from Samsung factories could help Qualcomm win back the Samsung mobile sockets.

Qualcomm is hoping that Snapdragon 820 will not only escape the mistakes of Snapdragon 810, but also help repair its image as it tries to sell chips beyond the traditional smartphone and tablet markets. Qualcomm is looking to the Internet of Things (IoT) as well.

Huge boost to Samsung’s chip business

By being the exclusive producer of Snapdragon 820 chips, Samsung stands to bring significant revenue and profit boost to its chip fabrication business. Apple Inc. (NASDAQ:AAPL) and several other vendors are giving Samsung a serious run for its money in key smartphone markets that its profits in the segment have begun to slow down.

It seems that Samsung is finding way to offset pressures in its mobile business. Besides the exclusive chip production deal from Qualcomm, Inc. (NASDAQ:QCOM), Samsung also produces the A-line chips that Apple uses in the modern iPhones.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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