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The Exynos is an in-house AP of Samsung Electronics, but it was not used in the Galaxy S23 series launched this year. This is because the Galaxy S22 series for 2022 was embroiled in the game optimization service (GOS) controversy last year. The GOS lowers the performance of Galaxy devices when playing games over a heating problem concern. As the MX Business Division at Samsung Electronics is also considering re-adopting the Exynos in Galaxy smartphones, it remains to be seen if the Exynos will replace the Qualcomm Snapdragon as the main chipset for the Galaxy S24 series, which will come out next year.

The MX Business Division has begun to consider using its in-house mobile AP Exynos 2400 chipset in the Galaxy S24 series which will be launched next year, according to industry sources on April 6. This is because not using Exynos chips in Samsung smartphones, including the Galaxy S22, has made Samsung Electronics pivot more on Qualcomm for AP chips, weakening the Korean smartphone giant’s buying power in purchasing APs from Qualcomm, resulting in an increase in production costs.

According to Samsung Electronics’ business report, the company’s mobile AP purchases in 2022 totaled 9.13 trillion won (US$6.9 billion), up about 49.9 percent year on year. The figure accounted for 12.8 percent of the DX Business Division’s total purchases, eclipsing those of camera modules and display panels.

In 2022, the price of mobile APs also increased by about 77 percent year on year, adding to cost burdens on Samsung Electronics. It quadrupled as the year-on-year increase stood at 19.0 percent in 2021.

Industry analysts attributed the increase in Samsung Electronics’ mobile AP purchases to a surge in the smartphone maker’s use of the Snapdragon, a Qualcomm AP. Samsung Electronics used to use a combination of its own chipset, the Exynos designed by its System LSI Business Division, and Qualcomm’s Snapdragon in its smartphones. But it has increased its reliance on Qualcomm after performance issues with the Exynos surfaced in early 2022.

In fact, in the Galaxy S22 series launched early last year, the Qualcomm Snapdragon was used in 75 percent of them. The Exynos 2200 was loaded into Galaxy S22 series models for some European markets. However, after some users criticized the performances of the Exynos 2200 in the Galaxy S22 series, the company dropped the Exynos from the Galaxy S23 series released earlier this year. The second generation Snapdragon 8 AP was adopted for the Galaxy S23 series.

On top of that, foldable smartphones such as the Galaxy Z Fold 4 and the Galaxy Flip 4, which were released in August last year, were equipped with the Qualcomm Snapdragon, and the cost that Samsung Electronics paid to Qualcomm soared due to strong sales and the impact of a rise of the exchange rate.

As a result, industry observers believed that Samsung Electronics gave Qualcomm the upper hand in price negotiations. The company’s reliance on the Snapdragon AP also undermined its profitability. In fact, the MX Business Division earned a total of 13.65 trillion won (US$10.35 billion) in operating profit in 2021, but its operating profit contracted to 11.38 trillion won (US$8.630 billion) in 2022.

It is also worth noting that in the third quarters of 2018 and 2019, when Samsung Electronics’ mix of the Exynos was relatively good, its AP purchase costs were in the range of 2 trillion won (US$1.5 billion). But in the third quarter of 2020, when Exynos became less competitive, its AP purchase costs surged to the mid-US$4 trillion range.

“Component prices vary depending on market conditions, but a 77 percent increase in mobile AP prices over the past year can be seen as a sign of Samsung Electronics’ weakening buying power,” said an industry insider, adding, “A drop in Samsung Electronics’ Exynos adoption rate gives Qualcomm an advantage in price negotiations.”

In response, Samsung Electronics has begun to consider using the Exynos 2400 in the Galaxy S24 series to be released next year. Another factor is that Samsung Electronics’ System LSI Division has been recently pumping up its efforts to enhance the performance of the Exynos.

In particular, Samsung Electronics has decided to expand its strategic partnership with AMD in the area of next-generation high-performance and low-power graphics IP, which analysts considered positive. Through this partnership, Samsung Electronics plans to expand its Exynos lineup with next-generation graphics solutions based on AMD’s ultra-low-power, high-performance Radeon graphics design assets.

Samsung Electronics plans to provide high-performance, high-definition gaming experiences at the level of console games on a variety of devices including smartphones, and expand its R&D ecosystems for next-generation graphics solutions through this partnership.

Another interesting point is whether Samsung Electronics will apply a second-generation 3-nm process to the Exynos or not. The Korean chipmaker began the second-generation 3-nm process for the first time in the world last year.

The 3-nm second-generation process was expected to boost power efficiency by 34 percent compared to previous fifth-generation processes.

“Observing the current atmosphere at Samsung Electronics, I expect that Samsung Electronics will use Qualcomm chips for the Galaxy S24 series to be released next year,” said an industry insider. “If the Exynos does not secure competitiveness in terms of unit costs and yields, it will not be easy for Exynos to enter Samsung Electronics’ supply chain for smartphones.”

“Samsung Electronics’ partnership with AMD is a step toward regaining a foothold in the mobile AP market,” he said. “The System LSI Business Division has been working diligently to improve the competitiveness of Exynos, so it will be interesting to check if the Exynos will be able to make a comeback next year after being selected by the MX Business Division.”

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