Samsung looks to be less dependent on iPhone and iPad
Posted on 10 Jan 2013 at 10:09
Samsung is looking to supply chips to more Chinese and other emerging smartphone makers in a bid to counter any fall-off in demand from Apple, which is weaning itself off Samsung processors in its iPhones and iPads.
Apple isn't only Samsung's biggest rival, but its biggest customer. Between them they account for more than half the global smartphone market, and the South Korean group is the main supplier of mobile processors, or application processors, powering both Apple devices and its own range of Galaxy phones and tablets.
But, as Apple looks to be less reliant on its rival for parts for its gadgets - it is already buying fewer Samsung memory chips and display screens as the two have gone to war over patents - concerns have grown that Samsung may see its processor revenues tumble.
FeatureThe 22 best iphone apps
"As there are just two smartphone makers that are doing really well, chipmakers supplying them have grown in tandem. So we plan to bolster our relationship with those key customers," said Stephen Woo, president of Samsung's System LSI business, which makes processors for Apple products.
We see emerging players who have potential to grow in smartphones and we will continue to make efforts to supply them with our chips
Supplying processors for Apple products has been the mainstay of Samsung's system chips business.
Goldman Sachs estimates Samsung's AP chip sales to Apple will rise to $8.8 billion this year, or almost 80% of Apple's spending on Samsung processing chips, memory chips and flat screens. But that could tumble next year, as Apple will shift 30% of its AP business away from Samsung, with the company bagging only 20% of the supply by 2017, according to Goldman.
"We should diversify our customer base and are making such efforts already, adding some Chinese customers," Woo said.
China's Meizu, one of the local smartphone newcomers, uses Samsung's Exynos quad-core chip for its MX smartphone, and Lenovo's K860 LePhone is also powered by Exynos.
Still, Samsung's mobile processor business is almost entirely tied to the fortunes of Apple and its own mobile business - the Galaxy range. By comparison, chip rivals such as Qualcomm, Texas Instruments and Nvidia have a broader client base - from LG and Nokia to HTC, Huawei and Google's Motorola.
"We see emerging players who have potential to grow in smartphones and we will continue to make efforts to supply them with our chips," Woo said.
The mobile processor market, driven by roaring sales of smartphones and tablets, is a bright spot for a semiconductor industry that is struggling with falling computer sales. Research firm Gartner estimates the mobile processor market will grow 30% this year to $13.5 billion and hit $16.5 billion next year.
To strengthen its chip capability, Samsung bought UK chipmaker CSR's mobile phone connectivity and location technology for $310 million last year, and it is now looking at how it can improve modem chip technology, especially the baseband chip solution that enables wireless devices' radio communications.
"Baseband is a very important segment, but we don't have it. Given its importance, we're reviewing various options," Woo said.
Qualcomm is the biggest baseband chip company with almost 50% of the market, followed by the likes of Mediatek, Texas Instruments and Broadcom.
Chipmakers are increasingly seeking to produce a single chip solution that combines processing, a modem chip and connectivity chips that support Wi-Fi, Bluetooth and near-field communication (NFC) functions in one chipset. This combo-package is popular among low-end smartphones as it allows phone makers to cram various chips into compact devices.
Woo said Samsung, however, was not considering expanding into a single chip solution and will instead continue to focus on pure processing chips favoured for high-end phones because it allows manufacturers to differentiate their hardware offerings with various chip combinations.
The explosion of mobile devices has opened a big opportunity to Samsung as Intel, the world's top chipmaker, struggles to crack the mobile processor market dominated by the makers of ARM-licensed chips. Samsung is the biggest maker of ARM-based chips, such as Apple chips and Samsung's own Exynos brand. Intel's market share in mobile devices is only 1%, as UK chip designer ARM holds a near monopoly.
Woo said Samsung was not looking to break into the desktop computer or server processor market - which Intel dominates, but is under threat from ARM-based chips that boast low-power consumption and compact design.
"For the time being, our focus will pretty much be on enhancing our AP offering, especially for high-end mobile devices," he said.
During a CES 2013 speech, Woo unveiled Samsung's latest "Exynos 5 Octa" processor, tailored for high-end smartphones and tablets. The new processor boasts eight cores: four to handle processing-intensive tasks and four to take on lighter workloads, to conserve battery life.
Glenn Roland, vice president and head of new platforms at Electronic Arts, demonstrated its processing power by running the high-octane Need for Speed: Most Wanted, on a Samsung reference tablet.
Samsung also unveiled a prototype phone with a flexible display that can be folded back and forth - almost like paper - by replacing a glass panel with super-thin plastic to make it bendable and unbreakable, as well as a smartphone equipped with a curved display.
"It won't break even if it's dropped. This new form-factor will really begin to change how people interact with their devices, opening up new lifestyle possibilities... allow our partners to create a whole new ecosystem of devices," said Brian Berkeley, senior vice president of Samsung Display, a flat-screen unit of Samsung.
Is your business a social business? For helpful info and tips visit our hub.
- Windows 8.2: release date, features and free cloud version
- iPhone 6 release date, rumours, specs and features: when will the iPhone 6 come out in the UK?
- Amazon posts another loss - its biggest since 2012
- Apple and Swatch to buddy up for iWatch release
- StubHub fraud: how hackers stole $1m using tickets
- How Google Glass ruined my lunch hour
- Smartphone battery packs: can a USB power pack beat the festival battery blues?
- Windows Easy Transfer – not so "easy" in Windows 8.1
- Formula 1: what a difference virtualisation makes
- Office of the future: comfy chairs and tablets everywhere
- I went to Glastonbury and the only thing that got high was my smartphone
- Meet the robots helping teach children
- PaperLater: would you pay to print the internet?
- Amazon vs Kobo: how much to make the ebook switch?
- Phishing emails: how I nearly got caught out
- How to add in-app purchasing to an iPhone, Android or Windows app
- Remote-control ransomware: TeamViewer and software hardball
- Why laptops with serial ports matter to the Internet of Things
- Make your mobile battery last longer
- Small steps into handling Big Data
- Nexus 5: does it really run stock Android?
- How to get broadband to a garden office
- How to write your company's IT security policy
- Raspberry Pi and Wolfram: a must-have for every child
- Could you get by with Office Web Apps?