Samsung’s smartphone chipset expenditure is slowly creeping upwards to a point where the Korean behemoth is now being forced to compromise on the features that ship with its overall Galaxy range. Due to an extreme reliance on external companies such as Qualcomm and its Snapdragon chipsets, Samsung’s costs have risen to almost $7 billion alone this year, which is more than a 200 percent increase compared to the $2.3 billion it paid back in 2019.
Continued increase in Samsung’s smartphone chipset expenditure also explains why it lags in upping the specifications of its Galaxy S flagship series
Developing cutting-edge smartphone chipsets on advanced manufacturing processes is an expensive endeavor, and according to the statistics shared by Revegnus on X, Samsung is finding out the hard way. Last year, Samsung had to pay a $7.1 billion bill in smartphone chipset costs, and with 2023 already reached $6.943 billion, it is safe to assume that the company will be paying around 10 percent more this year, with an increase expected to happen in 2024 too.
It goes without saying that these costs cannot be sustained unless Samsung comes up with an efficient solution, which is reducing its dependency on Qualcomm and using more of its in-house solution, the Exynos range. This expenditure increase will also explain why Samsung continues to lag behind the competition in outfitting its Galaxy S flagship lineup with impressive specifications, particularly regarding RAM.
According to a previous rumor, the company is again limiting the Galaxy S24 lineup to feature 12GB RAM, whereas the competition is not just proceeding with launches sporting the Snapdragon 8 Gen 3, but are sold for a lower price and feature a whopping 24GB of RAM, with the latest entrant being the OnePlus 12. One can argue that Samsung pushes more volume than its other Android competitors, but the Korean giant’s shipments have not drastically increased compared to last year.
The amount Samsung spends on purchasing mobile application processors has been increasing over the years.
From early 2023 to the third quarter, Samsung paid $6.943 billion for mobile application processors, marking a 10.4% increase compared to the same period last year.…
— Revegnus (@Tech_Reve) December 2, 2023
The situation in the future is not expected to improve either, with Qualcomm’s Snapdragon 8 Gen 3 rumored to be more expensive than the Snapdragon 8 Gen 2, which was already priced painfully for Qualcomm’s phone partners as it fetched an estimated $160 for the entire package. Also, with the Snapdragon 8 Gen 4 arriving next year with its custom Oryon cores, Qualcomm has already hinted that it will be more expensive than the Snapdragon 8 Gen 3, and that will once again eat into Samsung’s margins, despite the improvements of the silicon.
It cannot be emphasized enough that the firm needs to push forward with its Exynos chipset development, as making its own SoCs on par with the competition will allow Samsung to save billions in costs. If the company cannot find its way around this obstacle, it will continue to face this vicious cycle, and a point may arrive where consumers find little appeal in future Galaxy S devices, which will diminish its brand value.
News Source: Revegnus
