Apple, Companies, VR World

Qualcomm to Use Samsung’s Fabs For Next Flagship Chip

Qualcomm (NASDAQ: QCOM) will be turning to its competitor Samsung (KRX: 005930) to use its fabs to build its next-generation flagship SoC, according to a report by Re/Code.

The publication says that the Snapdragon 820 will be manufactured at Samsung’s chip-making plants due to their ability to produce silicon at 14 nm as opposed to the 20nm that TSMC (TPE: 2330) produces its chips at. Producing it at a smaller process node means better battery life.

While Qualcomm had a handful of high-profile wins with the Snapdragon 810, it missed out on the Galaxy S6. Instead Samsung decided to use its home-grown Exynos chip instead. This major loss meant that Qualcomm was forced to cut its financial outlook for the year.

Cooperating with the competitor

Cooperation between two companies that compete in some sectors is not uncommon within the smartphone space. Remember: Samsung and Apple (NASDAQ: APPL) work closely on the iPhone and iPad, with Samsung being the source of everything from the SoC to the display, yet still compete fiercely.

Samsung’s fab facilities present a fierce competitor to TSMC, but it’s advantage might not last that long. TSMC is pushing past 14nm and moving to 10nm which should tip the balance of power back in its favor.

However until then TSMC has a lot to do in order to win back these high profile clients. It’s not confirmed that Samsung has won these deals, but it’s very likely. TSMC posted a solid financial year with the business that it won from Apple’s iPhone 6. To continue these gains, TSMC will have to prove to vendors that it’s the better option than Samsung for the 2017 flagship phones.