Samsung closes the loop in high-end smartphones production chain

Until this year, all the high-end Samsung smartphones came with an in-house CPU design (Exynos) or Qualcomm performance equivalent; depending of market and sales volumes.

Q810_Exynos7

But on top of moving to Glass + Metal materials, it seems Samsung game rules changed also this year for CPU, and the newest Galaxy S6 and S6 Edge will come only with Exynos 7 CPU flavor inside.

Mr. Shin Jong-kyun (Samsung CEO) argued:

Samsung previously used more Qualcomm mobile processors; But we are flexible. If Qualcomm chips are good enough, then we will use them. Samsung always uses the best-quality components and materials to differentiate our products from those by rivals.

But I don’t think that current Qualcomm Snapdragon 810 is not good or powerful enough. My view is that Samsung wants to have a closer control in the supply chain and full Bill Of Materials costs, reducing overall production costs and improving margin benefits avoiding paying any kind of IP to Qualcomm (which are not negligible).

If Exynos performs well and Samsung doesn’t suffer production bottlenecks, I doubt that they will come back to Qualcomm and probably they will begin to introduce their Exynos in medium range, increasing the visibility of Samsung Semic. R&D division.

Basically they are following the steps made by Apple: to have a closer control up to the last dollar cent of the BOM to achieve bigger benefits.

This was done some decades ago until most companies began to outsource progressively everything, focusing only in branding; but I think the tech business trend is changing again, having in-house control even up to lower ASIC design level.