LG Electronics has joined hands with Intel to produce its own chips for its smartphones and mobile devices. The movement is considered the win-win strategy of LG Electronics, which seeks to strengthen the competitiveness in smartphones, and Intel, which targets the emerging foundry market.
The world’s largest semiconductor maker Intel announced at the Intel Developer Forum (IDF) 2016 in San Francisco on August 16 (local time) that LG Electronics will use Intel’s foundry business to manufacture its own mobile application processors (AP). The Korea’s second biggest phone maker plans to produce its own chipsets using Intel’s 10 nanometer process. The company developed its first mobile AP named Nuclun in 2014 and applied it to its smartphone G3 Screen. However, it has been supplied the processors from global leading companies, including Qualcomm, since then.
LG Electronics has joined hands with Intel largely due to the effort to boost the competitiveness in smartphone. The company suffered sluggish sales as Qualcomm's Snapdragon 810 had heat problems last year. Since then, LG Electronics has come up with the desperate measure to use the Snapdragon 808 chipset, which is a step behind the Snapdragon 810, in the G4 and V10, but it has been still struggling. The company’s latest movement also shows the will to secure the price competitiveness by using Intel’s foundry business to manufacture its own semiconductors.
With LG Electronics having decided to produce its 10 nanometer chipsets at Intel factories, Intel has officially announced to tap into the emerging foundry market. In particular, Intel’s movement to sign the contract with its competitor ARM Holdings, a British semiconductor and software design company, to use ARM's Artisan semiconductor design platform also helped the company to enter the foundry market.
As Intel is strengthening its foundry business, all eyes are on what strategies its competitors, including Taiwan’s TSMC, Global Foundries, UMC and Samsung Electronics, will pursue. According to semiconductor market researcher IC Insights, TSMC had the highest market share of more than 50 percent with sales of US$26.4 billion (29.36 trillion won) in 2015. The Taiwanese firm has secured global leading SoC companies, such as Apple and Qualcomm, as its customers.