Samsung loses Qualcomm contract to TSMC for making next-gen Snapdragon chips

Editor’s take: Samsung faces the problem of balancing enhancements in its foundry enterprise with the calls for of its smartphone division. The corporate’s capability to navigate these complexities shall be essential for sustaining its management in each the semiconductor and smartphone markets.

Samsung Foundry has as soon as once more didn’t secure a contract from Qualcomm for the manufacturing of its newest flagship cellular processor, the Snapdragon 8 Elite Gen 2. This setback marks one other chapter in Samsung’s ongoing wrestle to compete with trade chief TSMC, which has been awarded all the manufacturing contract for the upcoming chip.

The choice comes at a important juncture for Samsung Foundry, which has been grappling with low yield charges in latest months. Nevertheless, there are indicators of enchancment on the horizon. The corporate just lately stabilized its 3nm manufacturing course of, reaching acceptable yield charges, and is concurrently pushing ahead with the event of much more superior 2nm chips. Samsung additionally has formidable plans to provide 1.4nm chips by 2027.

Regardless of these developments, Qualcomm’s option to companion completely with TSMC for the Snapdragon 8 Elite Gen 2 displays the present state of the trade. TSMC’s confirmed observe report and reliability seemingly outweighed any potential price financial savings that Samsung might need provided. This choice is especially impactful given the widespread adoption of Snapdragon SoCs in flagship smartphones.

The lack of this contract would not spell the tip for Samsung Foundry’s aspirations. The corporate is predicted to make one other bid for the manufacturing of the Snapdragon 8 Elite Gen 3 when it enters improvement. To enhance its possibilities, Samsung might want to efficiently fulfill orders from different purchasers and additional enhance yield charges.

This improvement coincides with reviews of a major value improve for the Snapdragon 8 Elite Gen 2, which might result in increased prices for premium smartphones, together with Samsung’s Galaxy collection. This example presents a dilemma for Samsung’s cellular division as it might want to think about different methods to keep up aggressive pricing.

One potential answer might contain reviving Samsung’s in-house Exynos chip line for future Galaxy gadgets, such because the S26 collection. This transfer might assist offset the influence of rising Snapdragon costs.

Alternatively, Samsung may discover partnerships with different chip producers like MediaTek or make compromises in different elements comparable to shows and cameras to offset elevated processor prices.

Regardless of these challenges, trade specialists anticipate that Samsung’s upcoming Galaxy S25 collection will stay among the many prime smartphone selections in 2025. The corporate’s power in different areas of cellular know-how ought to assist its operations because it continues to refine its foundry capabilities and chip manufacturing processes.