Xiaomi and Oppo Developing Their Own APs
Samsung Electronics' smartphone application processor (AP) business is facing new challenges. China's Xiaomi and Oppo, which are potential clients of Samsung Electronics, are accelerating their own AP development. In addition, Taiwan’s MediaTek, a rival company of Samsung, is expanding its presence in the mid- to low-end AP market.
According to market research firm Strategy Analytics (SA) on April 12, Samsung Electronics' share in the smartphone AP market stood at 9.7 percent in 2020, down by 2.3 percentage points from 2019, and its ranking slid by one notch to fifth place.
APs are semiconductors that handle data communication and computation in smartphones. Qualcomm and MediaTek are competing with Samsung Electronics in the market.
Many analysts predicted until 2020 that Samsung Electronics' AP share would rise as HiSilicon, a subsidiary of Huawei, was virtually kicked out of the market due to U.S. sanctions.
Until now, however, it is not Samsung Electronics but Taiwan MediaTek that has taken HiSilicon’s share. MediaTek's market share spiked from 11.7 percent in 2019 to 17.2 percent 2020. MediaTek targeted Chinese smartphone manufacturers with low- and medium-end chips that were cheaper than Qualcomm chips but did not lag behind them in performance. According to market research firm Omdia, Xiaomi smartphones that adopted the MediaTek AP 2020 amounted to 63.7 million units, up 223.3 percent from 2019.
The System LSI Business Division in charge of the AP business at Samsung Electronics is aiming to supply APs to Chinese companies. In November 2020, it won a contract to supply the Exynos 1080 AP for 5G phones to Vivo, the world's fifth-largest smartphone maker. However, China's Xiaomi, the world's third-largest, and Oppo, the world’s fourth-largest have yet to order APs to the System LSI Business Division. Recently, a Taiwanese media reported that Xiaomi and Oppo would rather develop their own 5G chips by the end of this year in cooperation with China's fabless company UniSOC.
In response, Samsung Electronics is planning to release its new Exynos AP, which is being developed in cooperation with AMD in the United States, as early as the second half of 2021, aiming for a rebound.