Samsung Electronics is expanding its non-memory semiconductor business steadily by succeeding in supplying the Exynos Application Processors (APs) to Motorola after Meizu.
Motorola is said to have load Samsung's Exynos AP into its next smartphone “One Vision (P40)” to be released in China and the US instead of Qualcomm's Snapdragon, said sources in the Korean business community and foreign news outlets on March 18. This is a mid-priced model among Motorola's smartphones which was certified by Google's genuine operating system (OS) certification program, Android One.
Motorola plans to release the world's first 5G phone next month in partnership with Verizon, America's largest mobile carrier. On top of that, the company is rumored to launch a foldable phone based on the designs of the Startec and the Razr, popular old models of Motorola.
In the telecom chip industry, Chinese smartphone makers are paying attention to the possibility of adopting Samsung Electronics’s APs as Samsung Electronics may receive reflective benefits from the U.S.-China trade war. In fact, some Chinese smartphone makers such as Meizu have adopted the Exynos AP for their budget smartphones, boosting the value of Samsung Electronics as Qualcomm's formidable rival.
As of September of 2018, Qualcomm accounted for 39 percent of the global AP market, followed by MediaTek (23 percent), Apple (14 percent) and Samsung Electronics (11 percent). Considering that Apple’s APs go into its own smartphones only, MediaTek and Samsung Electronics are considered companies that can compete with Qualcomm neck and neck.
In the meantime, Samsung Electronics is lowering its dependence on memory chips and shoring up its competitiveness as a general semiconductor company such as taking second place in the world market not only in APs but also in foundries and image sensors.
In the fourth quarter of 2018, Samsung Electronics' non-memory semiconductor sales swelled 5.5 percent to 3.9 trillion won, compared with 2.93 trillion won in the same period of 2017. This sales figure was calculated based on the total revenues of Samsung Electronics' DS (Device Solutions) Division minus sales of the Memory Semiconductor and Display Business Divisions.
During the same period, sales of Samsung Electronics' DS Division slid 13.4 percent due to a drop in memory semiconductor prices. This means that the company’s non-memory sales recouped a drop in its memory sales. This was largely thanks to an increase in non-memory orders to Samsung Electronics.
In particular, some Chinese IT companies increased their application-specific integrated circuits (ASICs) orders to Samsung Electronics about 50 percent in the past one year, and will order more than 100 ASICs in the next two years.
In addition, Samsung Electronics will complete an extreme ultraviolet (EUV) equipment line in the second half of this year by investing more than six trillion won in Hwaseong, Gyeongi Province in Korea. The company will operate an under-7nm foundry process and is considering DRAM production in the line, too. The company is also expanding its presence by winning orders from IBM for its central processing unit (CPUs) following Qualcomm thank to the its top-level competitiveness in fine processing in the chip industry.
This move has been made in line with vice chairman Lee Jae-yong's will to lead Samsung Electronics to grow into the world's largest non-memory semiconductor company by the year of 2030.