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Samsung in Talks With ZTE, Different Smartphone Makers to Provide Cellular Processor Chips

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Samsung Electronics is in talks with a number of smartphone makers together with China’s ZTE to produce cellular processor chips, a senior government mentioned, a transfer that can deliver it in additional direct competitors with bigger rival Qualcomm.

The South Korean tech large generates the majority of its revenue from its bread and butter reminiscence chips and has been beefing up growth of logic chips comparable to cellular processors, picture sensors and automotive chips to diversify.

Its flagship Exynos cellular chips energy Samsung’s Galaxy line of smartphones, however the chipset has just one exterior smartphone shopper – China’s Meizu Technology.

“We’re speaking to all OEMs,” Inyup Kang, head of Samsung’s logic chip developer known as System LSI, advised Reuters in an interview, referring to unique gear producers.

Kang, a former Qualcomm government, mentioned he expects to announce a brand new shopper for its Exynos chipsets within the first half of 2019.

Its seek for new purchasers for the Exynos chips comes as the USA banned its firms from promoting elements to China’s ZTE for seven years after it violated the phrases of a settlement deal for illegally delivery items made with U.S. components to Iran and North Korea.

That has created urgency for ZTE to diversify its suppliers, analysts mentioned, though makes an attempt to resolve the difficulty have picked up some tempo after US President Donald Trump pledged on Sunday to assist ZTE “get again into enterprise, quick”.

No matter US-China commerce talks, Kang mentioned Samsung will proceed discussions with ZTE.

Its efforts like that can put additional strain on the business chief Qualcomm, which mentioned final month it expects the lack of enterprise with ZTE to decrease its income by three cents per share subsequent quarter.

Samsung is ranked far behind rivals Qualcomm and Apple in cellular processing chips, however using Exynos chips by its personal smartphone enterprise helped it turn into the quickest rising participant within the section, in response to analysis agency Counterpoint.

Samsung’s System LSI enterprise noticed a 27 p.c rise in shipments final yr, Counterpoint says.

Qualcomm additionally faces competitors from Chinese language firms comparable to Huawei Applied sciences, which makes use of its personal processing chips known as HiSilicon in its flagship smartphones.

Chips for autos
Because the smartphone market slows, Samsung’s logic chip division additionally plans to hunt development in new fields comparable to fifth-generation cellular community expertise (5G) and automotive, Kang mentioned.

He mentioned Samsung is in dialogue with a number of vehicle firms to develop chips for autonomous driving, declining to call the automotive makers. It mentioned in January that it’s offering automaker Audi with Exynos processor chips.

System LSI nonetheless makes use of Samsung’s foundry for all of its manufacturing wants, however is in talks with different contract producers to diversify manufacturing in areas Samsung’s foundry is not ready for but, comparable to high-voltage automotive merchandise, Kang mentioned.

TSMC is the world’s prime contract chip producer, adopted by the likes of U.S.-based International Foundries, Taiwan-based UMC and Samsung.

Samsung’s semiconductor enterprise, reporting a 2017 working revenue of KRW 35.2 trillion ($33 billion), contributed greater than 65 p.c of the entire agency’s file annual revenue of KRW 53.65 trillion final yr.

Out of this semiconductor enterprise, reminiscence chips contributed about 96 p.c of the income because it rode a “growth” cycle, whereas System LSI and foundry took up the remaining with about KRW 1.44 trillion in 2017 working income, in response to knowledge from Mirae Asset Daewoo Securities.

Kang mentioned his enterprise is anticipated to see a 5-10 p.c income development this yr in greenback phrases. He declined to supply final yr’s development price.

© Thomson Reuters 2018



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