Last year, Samsung launched their flagship Samsung Galaxy S6 using their in-house System-on-Chip, the Exynos 7420. This chipset is conventional in many respects - it's uses dual tiers of application processor cores, eight in total, plus an integrated modem and GPU in common with many competitors. However, where Samsung had an advantage is that the Exynos 7420 was manufactured at a 14nm process size at a time when many competitor chips were still being built to a 28nm process size and a few were at the 20nm size. The smaller the size of the chip, the less voltage that is needed to drive the unit and this is important because power consumption and heat production are in proportion to the square of the voltage applied. This meant that 2015's Galaxy S6 had a cooler, more battery efficient chip compared with the competition. In what seemed like the space of a few months, Samsung had the best mobile chipset on the market - designed and built in-house. This showed the world what the semiconductor business could do.
For 2016, Samsung is using a mix of processors for its flagship Galaxy S7 handset: either the in-house Samsung Exynos 8890 or the Qualcomm Snapdragon 820, which are being built on a similarly small process size. The business still believes it has a competitive advantage when it comes to mobile semiconductors and is aggressively pursuing sales across the industry. A report shows that Samsung Semiconductor executives have this week been in California's Silicon Valley charming chipmakers to use their factories. We know that Samsung has agreed chip manufacturing contracts with both Apple and Qualcomm and going forwards, Samsung are positive about their prospects. Samsung Semiconductor's senior director, Kevin Low, explained to the source: "We think we are leading again, this is not a one-time success story."
Samsung believe they have the lead for a combination of reasons, one being that they will have new chipsets built to a 10nm manufacturing size later in the year. Furthermore, the existing 14nm size has been refined such that it is now considerably cheaper to use, which will result in lower priced 14nm processors. Samsung are also working on a second generation 10nm technology, which is claimed will offer 10% better performance compared with the first generation chipsets. However, whilst Samsung's claims sound impressive, two of their competitors, the TSMC (Taiwan Semiconductor Manufacturing Company) and Intel, also claim to have a lead at the 10nm chipset technology. Depending on what is considered to be the leading technology, each business has a case. Industry experts cite that it is not simply about who is able to manufacturer the chips at this size first, but about costs and yield rates. Companies need to be able to efficiently build 10nm chips in sizeable quantities.
Samsung as a business are rapidly diversifying away from selling products to selling components and services alongside the products - we've seen Samsung's mobile payment business, Samsung Pay, becoming more and more important and now we are seeing the chip making business becoming more important. Samsung do not enter a market unless they have a route to becoming one of the leading businesses operating in this aren: the other chipset manufacturing businesses may need to raise their game.