I’ve mentioned before that it seems some strange things are happening in Samsung’s mobile chip division, LSI, which is the one that makes Exynos chips, too. For whatever reason Samsung seemed to have preferred using a Qualcomm chip once again, instead of their own.
Apparently, the LSI division couldn’t iron out the production and performance issues with Exynos 5 Octa, to make it available in high volume for the Galaxy S4 launch. This is why at least the first batch of 10 million Galaxy S4 units will be using Qualcomm S600 chips, in proportion of 70%.
While this will make Qualcomm very happy, and will no doubt help it have another great year in terms of profits and revenues, it puts Samsung at an increasingly dangerous position in the chip market, as well as every other chip maker out there. Qualcomm already dominates more than half of the mobile chip market. Neither Samsung nor others using their chips should want to push Qualcomm towards a 80%-90% market share. Such an outcome will only mean higher prices for Samsung and other OEM’s, and also for consumers.
The natural course of action for Samsung would be to use more and more of their own chips in their own devices, not fewer. Being able to use their own Exynos chips in most of their products would ensure Samsung optimizes the hardware exactly for what they need it. For example, if their goal is to use OpenCL in some of their apps, then they can use the GPU’s they need inside Exynos, that gives them higher performance for GPGPU computing.
Not to mention that using their own chips means the money is kept within the company, and they don’t need to send that money to another company. If their production for Exynos chips ramps up dramatically, they can also start selling it to other companies such as HTC or Motorola, if they don’t care about it being a competitive advantage against other companies, and just want to make a lot of money off it.
Apple is also bound to stop contracting Samsung’s foundry, so they need to counter-balance that, too, by making and selling more Exynos chips made in their own foundry, as well as accepting business from other chip companies. If Samsung looks more inwards towards their mobile chip business, they stand to save more money, and also make more money, instead of paying others for the chips they need.