Samsung said it has begun mass production of Qualcomm's (NASDAQ:QCOM) Snapdragon 820 processor using a second generation of its 14-nanometer LPP (Low-Power Plus) chip-building process, marking a major victory as the company works to expand its chip business to support a slowing smartphone unit. The exclusive deal is reportedly worth more than $1 billion.
The Korean manufacturer first used the 14-nanometer process last year in its own Exynos 7 Octa chip before expanding it to other products throughout the year. The process is thinner than chipsets produced by rival Taiwan Semiconductor Manufacturing Co. (TSMC), which manufactures chipsets for a wide range of players. Samsung claims its technology enables it to produce thinner, more powerful chipsets with improved power efficiency.
Samsung said the Snapdragon 820 processor is expected to be in devices shipping in the first half of this year, although it declined to say whether the chip would also be included in Samsung phones such as the upcoming Galaxy S7. The announcement between Qualcomm and Samsung confirms reports that surfaced nearly a year ago and marks a major blow to TSMC, which counts Qualcomm as an important customer.
Samsung has struggled as smartphone growth slows worldwide, and the company is expanding its component business in an effort to offset flagging handset sales. It also has set its sights on the IoT, touting its 14-nanometer process as "one of the most optimized solutions for mobile and IoT."
The Korean company recently posted preliminary fourth-quarter profit that fell well short of Wall Street expectations. Samsung said it would post a 15 percent year-over-year increase in profit over the same quarter in 2014, which would be a substantial letdown after seeing an 80 percent year-over-year increase in operating profit during the third quarter.
The company reported good news on other fronts this week, however: It announced that KNOX, its proprietary security offering for mobile devices, has received approval from both the China Information Security Certification Center and France's National Agency of Computer Security, paving the way for it to market to enterprises in those two markets. And it reportedly will become Apple's main supplier of OLED panels, and is said to be preparing for the job with an initial investment of between $2.5 billion and $3.3 billion in its manufacturing business. That investment may rise to nearly $7.5 billion depending on order levels, according to one report.
- see this Samsung press release
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