Report: Qualcomm working on updated Snapdragon 810 chip for Samsung's Galaxy S6

Qualcomm (NASDAQ:QCOM) is expected to provide Samsung Electronics with a new version of its Snapdragon 810 chipset in March for the next version of Samsung's flagship Galaxy S smartphone, according to a Wall Street Journal report. The report came after Bloomberg reported that Samsung would not use Qualcomm silicon in the next version of its phone because the Qualcomm chipset overheated during testing. Instead, Samsung will reportedly use its own chipset.

Both reports cited unnamed sources familiar with the matter. Qualcomm and Samsung have declined to comment on the rumors. According to the WSJ's sourceit isn't clear whether the updated version of the Snapdragon chip would arrive in time for use in the Samsung phone, expected to be called the Galaxy S6. If it does not arrive in time, the report said, Samsung plans to use its own chipset in the phone.

It's unclear when Samsung might announce or release the new version of its Galaxy S phone, though it may do so at the upcoming Mobile World Congress trade show in early March.

The Snapdragon 810 is a key part of Qualcomm's sales plans for 2015, and the company expects the chipset to power several high-end smartphones. It's already inside LG Electronics' G Flex 2 and Xiaomi's Mi Note Pro phablet.

Qualcomm President Derek Aberle said the 810 has "good traction" with handset makers. "We feel like we are on track with the 810," he said earlier this month at the Consumer Electronics Show, according to the Journal.

If Qualcomm were to be cut out of the design for the next Galaxy S phone, it would represent  a significant blow, not only in terms of potential lost unit sales totaling in the millions but it would also ding Qualcomm's reputation in mobile. Samsung, the world's largest smartphone maker by volume, is Qualcomm's second-largest customer, according to Bloomberg's supply chain analysis, accounting for about 12 percent of Qualcomm's sales.

However, despite the Bloomberg report, LG has reported no issues with the Snapdragon 810 in the G Flex 2. "There will be no problem with the G Flex 2 phones," LG said in a statement to Bloomberg. "We are taking every measure to ensure there will be no overheating problem."

"I am very much aware of the various concerns in the market about the (Snapdragon) 810, but the chip's performance is quite satisfactory," Woo Ram-chan, LG vice president for mobile product planning, told reporters this week at a press event for the G Flex 2, according to Reuters. Woo said LG's internal tests show that the new phone emits less heat than other, existing devices. "I don't understand why there is an issue over heat," he said.

In the past Samsung has used its in-house Exynos processor for certain variants of its products, including Galaxy S smartphones, especially in its home market of South Korea. But Samsung has typically used Qualcomm silicon for markets like the U.S. because of Qualcomm's ability to integrate LTE modems with its application processors.

Cowen & Co. analyst Timothy Arcuri said he thinks that the claim that Qualcomm would be cut out of the Galaxy S6 is "wrong." According to Barron's, he wrote in a research note that "the most likely outcome is Samsung launches S6 in Korea w/Exynos and delays shipments in other regions as our work has always suggested it was not ready w/a complete RF and modem solution."

For more:
- see this WSJ article (sub. req.)
- see this San Diego Union-Tribunarticle
- see this Barron's article

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