Samsung’s increased spending on mobile AP chips attracts attention

Snapdragon 8 Gen 2 [Courtesy of Qualcomm]

Recent data showed that the amount spent by Samsung Electronics Co. in purchasing mobile application processor (AP) chips for smartphones recently surged to 9 trillion won ($6.89 billion) as of the third quarter of 2023, highlighting the pressing need for a diversified supply chain or local production for AP chips to ensure greater profitability.

According to the data obtained from the South Korean tech firm on Thursday, Samsung Electronics spent 8.98 trillion won on mobile (AP) chips. This constitutes 18.1 percent of the total raw material purchases made by the company’s DX division, which is responsible for manufacturing smartphones and home appliances. In comparison to the third quarter of 2022, Samsung Electronics’ spending on AP purchases increased by over 800 billion won to hit 8.14 trillion won.

The increase was led by the tech giant’s greater dependence on Qualcomm’s mobile AP Snapdragon. Samsung Electronics adopted the Exynos 2200 developed by its System LSI Division and Qualcomm’s Snapdragon 8 Gen 1 as the mobile AP for the Galaxy S22 released in February 2022.

But consumers complained about heating, battery drain, and lower power efficiency in the Galaxy S22 phones equipped with Exynos 2200, which forced the tech giant to deploy only Snapdragon 8 Gen 2 in the following Galaxy S23 series. Qualcomm APs were also used in the Galaxy Z Flip 5 and Fold 5, a foldable series released in the second half of 2023. All these developments reduced the company’s market share in the global AP industry compared with 2010.

Exynos 2400, Samsung’s next-generation AP chipset, will be a game changer, according to industry experts. It is expected to be deployed in the Galaxy S24 series, which is set to be released in early 2024. Its central processing unit (CPU) performance increased by 1.7 times compared to its predecessor and AI performance has also been improved by 14.7 times.

Market experts are focusing on actual improvements in AI performance following the use of Exynos 2400 as Samsung Electronics recently ramped up generative AI development. The tech firm suggested that its own generative AI Samsung Gauss will make its debut on the Galaxy S24.

To secure AI edge devices and save costs, Samsung Electronics must ensure that Exynos 2400 reaches AI performance levels that are equivalent to Snapdragon, according to a source familiar with the industry.