Samsung's Exynos system-on-chips are used in many Samsung smartphones. For example, the international variants of the Galaxy S9 and the Galaxy S9+ are powered by the flagship Exynos 9810 SoC. Up until now, the only external smartphone client to use Exynos SoCs has been Meizu.
However, a Reuters report now states that Samsung Electronics is in talks with "several smartphone vendors" including ZTE to supply mobile processor chips. This will lead to more direct competition with Qualcomm. Samsung generates most of its profits from its memory chips, and the report notes that it has been ramping up development of logic chips such as mobile processors, image sensors and automotive chips in a diversification attempt.
Samsung LSI's head, Inyup Kang, told Reuters that the company is "talking to all OEMs." He also stated that he expects to announce a new client for Exynos SoCs in the first half of 2019.
ZTE's recent troubles are well-known at this point. Recently, the company was forced to shut its major operations. This is said to have created urgency for ZTE to diversify its suppliers, according to unnamed analysts quoted in the report. However, Samsung later sent a statement to Reuters that there is no certainty that a deal will be reached with ZTE. Its policy is to treat all vendors equally.
The report noted that such efforts by Samsung are likely to put further pressure on Qualcomm. Right now, Samsung is ranked far behind Qualcomm and Apple, its chief competitors, but the use of Exynos chips by the company's mobile division has helped it become the fastest growing player in the segment, according to Counterpoint. Notably, the company's System LSI business increased its shipments by 27 percent, Counterpoint stated. Qualcomm also faces competition from Huawei, which uses in-house HiSilicon Kirin SoCs in its smartphones.
Mr. Kang told Reuters that Samsung's logic chip division also plans to seek growth in new fields such as 5G network technology and automotive, as the smartphone market is slowing down. He stated that the company is in discussion with "multiple automobile companies" to develop chips for autonomous driving, but did not name the car makers. In January, the company announced that it is providing Audi with Exynos chips.
System LSI still uses Samsung's foundry for all of its manufacturing needs for now, but Mr. Kang added that the business is in talks with other contract manufacturers to diversify production in areas Samsung's foundry isn't prepared for yet, such as high-voltage automotive products.
The report noted that TSMC is currently the world's top contract chip manufacturer, followed by Global Foundries, UMC and Samsung. Samsung's semiconductor business reported a 2017 operating profit of $33 billion, and it contributed more than 65 percent of the whole firm's record annual profit of 53.65 trillion won last year.
Memory chips contributed about 96 percent of the profits in the semiconductor business, while System LSI and foundry took up the rest with about 1.44 trillion in 2017 operating profits. Finally, Mr. Kang stated that his business is expected to see a 5-10 percent revenue growth this year in dollar terms.
Source: Reuters 
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