Samsung moves to reduce Qualcomm reliance
By expanding component procurement channels Samsung Electronics is lowering its dependency on U.S.-based telecommunication chip giant Qualcomm in a similar manner to Apple cutting its dependency on Samsung.
As a critical partner, San Diego-based Qualcomm has been paid multi-billion dollars for telecom chipsets used in a variety of Samsung’s electronic devices, a company official said.
But a surge in smartphones equipped with advanced long-term evolution (LTE) technologies convinces Samsung to internalize its own capability of handling LTE-based chipsets.
Qualcomm representatives in Korea weren’t available for comment.
As of last year, Sony was Samsung’s biggest overseas client by buying some 7 trillion won components, followed by Apple with 6.2 trillion won, Dell with 3.4 trillion won and Hewlett-Packard with 3.2 trillion won.
Samsung officially declined to unveil its payment amounts to Qualcomm but sources who are familiar with the situation said the Korean tech powerhouse pays some 1 trillion won in royalties yearly to Qualcomm.
Qualcomm currently dominates in the entire baseband chip market accounting for roughly 80 percent, globally, according to data from market research firms.
``The situation is not different for Apple because the firm has switched to using baseband chips instead of the CDMA inventor from early this year,’’ said the Samsung official.
Samsung’s latest strategy comes after recently partnering with Japan’s wireless operator NTT DoCoMo to set up a ``fab-less semiconductor joint venture.’’ The chips produced from the venture will make use of 4G LTE and LTE-advanced standards.
NTT DoCoMo will provide technologies for telecommunications, while other partners ― NEC and Panasonic ― will design chips with those technologies.
Samsung will manufacture the chips on a foundry or contract basis, Samsung said in a statement.
``In the so-called `3G ear,’ Qualcomm is untouchable, however, the 4G LTE market is new, that’s why Samsung decided to join the venture with an attempt to have more patents in 4G LTE chipsets,’’ the Samsung official said.
Samsung Electronics has finished testing advanced Exynos chipsets to be used in the upcoming Galaxy S III, according to company officials.
The new quad-core Exynos will also support 4G LTE functions. This is ultimately a blow for Qualcomm as Samsung had used Qualcomm’s one-chip solution that combined telecoms, 3G and 4G LTE functions.
``Nothing has been decided yet, though Samsung is mulling the possibility of commercializing the Galaxy S III equipped with our new 3G-, and 4G-backed chips from 2012,’’ said the official.
A Samsung spokesman declined to confirm this.
Patents keep gaining significance as leading tech companies are entangled in heavy fights. Samsung is in a severe legal tussle with Apple in 10 different countries.
``Samsung shouldn’t suddenly lower it dependency on Qualcomm. In the case, Samsung does so, however, it’s all about patents especially in the world of the so-called smart devices,’’ said an official from Samsung’s chip plant in South Korea, who asked not to be identified as he wasn’t given the right to officially speak to the media.