Samsung has been increasingly using Qualcomm and MediaTek processors in Galaxy products in recent years. Case in point, the Galaxy S23 series shipped with a Snapdragon chip globally, with no Exynos variant. Unsurprisingly, its total expenditure on purchasing smartphone chipsets has increased sharply. The amount has almost quadrupled since 2019.
Samsung is spending more on smartphone chipsets than before
Samsung is one of the few chip designers with a semiconductor foundry. The likes of Qualcomm and MediaTek are fabless companies, meaning that they don’t have manufacturing lines. They depend on Samsung, TSMC, and other foundries to produce their chips. In a sense, the Korean behemoth is semiconductor self-sufficient, as it also makes memory and storage solutions.
However, its semiconductor and mobile divisions work independently and have a buy-sell relationship. So the mobile unit has the freedom to buy chips from external companies. With flagship Exynos products struggling to compete against Snapdragon, Samsung decided to ditch in-house chips for the Galaxy S23 series this year, leading to the cancellation of the Exynos 2300.
While consumers applauded it for the bold decision, it was a massive loss for the company as a whole. The chip division lost a major client, while the smartphone unit saw its expenses grow. Even if it gets a competitive price, buying semiconductors from external companies has added costs related to production and inventory management. Tipster Revegnus has shared data showing how Samsung’s chip expenses have increased in recent years.
According to the new report, Samsung purchased chips worth $6.943 billion in the first three quarters of 2023. The total spending in 2019 was just $2.3 billion, so the amount has almost quadrupled over the past four years. It spent $4.3 billion in 2020, $4.8 billion in 2021, and $7.1 billion in 2022. The Q1-Q3 total for this year is 10.4 percent higher compared to the same period last year. So the total amount for 2023 may surpass $8 billion.
The Galaxy S24 will have an Exynos variant
The growing share of Qualcomm and MediaTek processors in Galaxy smartphones and tablets added to Samsung’s chip expenses in recent years. The company may salvage the situation a little next year thanks to the return of flagship Exynos solutions. The Galaxy S24 and Galaxy S24+ will ship with the Exynos 2400 in some markets, including Europe and India. The US and a few other regions will get the Snapdragon 8 Gen 3.
The Galaxy S24 Ultra, meanwhile, will be powered by the Snapdragon chip globally. Since the Ultra model usually accounts for the majority of all Samsung flagship sales, the share of Exynos chips will be paltry in front of the Snapdragon. However, the Korean firm has a bigger plan for 2025. Its smartphone division is developing a custom processor for the Galaxy S25, so the Snapdragon might be phased out completely in a couple of years, at least from the flagship lineup.
2023-12-05 15:05:57