U.S. Sanctions on Huawei Offer an Opportunity
Samsung Electronics is seeking to expand its share of the global mobile application processor (AP) market by improving the performance of the artificial intelligence-based neural processing unit.
An opportunity is coming Samsung’s way as Huawei's fabless subsidiary HiSilicon has become virtually unable to produce sub-5nm APs due to U.S. sanctions.
Qualcomm topped the mobile AP market with a 40 percent share in the first quarters of 2020, followed by HiSilicon with 20 percent and Apple with 15 percent, according to Strategy Analytics (SA), a market research firm. Samsung Electronics was classified as "Others (25 percent)" along with Taiwan's MediaTek, so its market share was not disclosed separately. Samsung Electronics ranked third with a 14.3 percent share in the first quarter of 2019 after Qualcomm with 41.4 percent and Apple with 18.2 percent. On the other hand, HiSilicon accounted for only 13.5 percent in the first quarter of 2019.
The drop in Samsung Electronics' market share is attributable to the poor performance of its high-end AP Exynos 990 and a steep rise in Huawei's market share. The performance of the Exynos 990, which is loaded with the Mali, a GPU designed by ARM of the United Kingdom, is significantly inferior to Qualcomm's Snapdragon 865, which runs on the Adreno, a GPU designed by Qualcomm. The Exyno 990 reportedly lags behind the Snapdragon 865 in CPU performance as well. For this reason, Samsung Electronics stopped the practice of using the Exynos for its flagship smartphone models released in the Korean market and loaded the Galaxy S20 with the Snapdragon. It was a disgrace for the smartphone giant.
An increase in sales of Huawei's smartphones thanks to "patriotic consumption" by the Chinese people also contributed to the decline in Samsung Electronics' AP share. HiSilicon shipped 222.1 million APs in the first quarter of 2020 alone, doubling its market share in China to 43.9 percent compared to 24.3 percent a year earlier, said Chinese market research company CINNO.
Even under these circumstances, industry watchers predict that Samsung Electronics will not only return to third place in the global AP market but seek to take second place by the end of 2020. As HiSilicon is not allowed to use TSMC's foundry lines due to U.S. sanctions, Chinese smartphone makers are likely to adopt the Exynos. Qualcomm's Snapdragon is more expensive than the Exynos, so Chinese smartphone makers’ cost burden will increase if they go for the Snapdragon. MediaTek's AP Helio is said to be less powerful than the Exynos in high-end products.
Taking advantage of Huawei's predicament, Samsung Electronics has secured Vivo, a Chinese smartphone company, as a customer with its entry-level AP Exynos 880 equipped with 5G communication chips. At the same time, Samsung is looking to recover its self-esteem by applying the Exynos 992 with improved GPU and NPU performance, to the Galaxy Note 20 to be released in August.
The performance of Samsung Electronics' APs is expected to continue to improve. Samsung Electronics' subsidiary in Austin of the United States is actively recruiting NPU designers. Samsung Electronics stopped its mobile CPU core development project named “Mongoose” in 2019. Now the company is focusing on improving the AI performance of the Exynos by securing GPU and NPU technologies.
It is also strengthening cooperation with major global partners. For instance, it joined hands with AMD of the U.S. in 2019 to develop GPUs for mobile devices. Samsung Electronics' “AI Comes First” strategy will be further strengthened as AI is reshaping the semiconductor market. For instance, Nvidia, a GPU company, has recently eclipsed the market capitalization of Intel, a CPU leader.
"Although there are predictions that UniSOC, a subsidiary of China’s Tsinghua Unigroup, will take over AP technology from HiSilicon to continue the rapid growth of China’s semiconductor industry, it will be difficult for UniSCO to upgrade its technology at once,” said an official of the semiconductor industry. “Samsung Electronics will also speed up the growth of its mobile business by expanding the Exynos’ market share."