By Kim Yoo-chul
As part of efforts to solve a supply shortage Qualcomm will soon sign a deal with Samsung Electronics to produce chips used in the Korean firm’s smartphones, according to industry sources.
Industry and Samsung officials said Thursday that Samsung Electronics has ``tentatively agreed’’ with Qualcomm to produce the latter’s Snapdragon S4 chipsets using Samsung’s 28-nanometer technology from the first half of 2013.
“The two companies have agreed in principle on chip production and are now trying to iron out details, including production volume,” an industry source said.
Samsung expects that the latest partnership will help the company strengthen its capabilities for non-memory chip management. The Korean technology giant plans to invest more in non-memory chips this year than in conventional memory chips for the first time since it started its chip-making business.
Qualcomm CEO Paul Jacobs has said his firm is seeing ``very strong demand’’ for the S4 chipsets amid the rising popularity of data-intensive and speedier phones that also use advanced long-term evolution (LTE) networks.
Qualcomm’s MSM8960 chipsets are currently being used in the latest smartphones by Samsung, LG Electronics, Motorola and Taiwan’s HTC.
``Because Samsung is a long-time partner with Qualcomm for modem chips, it’s no surprise that the partnership has expanded to real chipsets,’’ said another industry source.
With the Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung producing the Qualcomm chipsets, analysts expect the supply will improve from early next year.
Qualcomm has also designated United Microelectronics Corp. (UMC) as another supplier with the capacity to help cope with tight supply of the leading-edge process at TSMC.
``The contract with Samsung, as well as UMC, means that Qualcomm plans to lower its heavy dependence on TSMC. It also means that Samsung’s foundry chip-making has reached a competitive level to guarantee the capacity that Qualcomm wants,’’ said an analyst at Semiconductor Equipment and Materials International (SEMI).
Samsung, which controls near 50 percent of the global memory chip market, is busy transferring its conventional chip lines to profitable non-memory lines such as foundry facilities.
Samsung’s global share for the foundry chip-making business was less than 2 percent as of the end of last year. However, market experts say Samsung is one of the few players that can threaten TSMC’s leadership as Samsung has abundant cash and top-class memory chip-making technology.
``It’s probable for Samsung to win more deals from Texas Instruments and Nvidia _ which are key partners of TSMC. In the near future, Samsung will become a top-tier foundry chipmaker that could compete with TSMC,’’ said the SEMI analyst.