Market Insight

The Supply-Side Implications of Samsung’s Exclusive use of 14nm Exynos AP in Upcoming Galaxy S6

March 26, 2015  | Subscribers Only

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Samsung stole the show at this year’s Mobile World Congress (MWC) in Barcelona Spain, as the smartphone industry bellwether unveiled a pair of Galaxy S6 flagship smartphones on March 1st.   The Galaxy S6 and the S6 edge represented a complete departure from previous flagship Galaxy S model designs, as the new models featured all new metal enclosures, in addition to a symmetrically curved display on the S6 edge.  Both models also contained another first for Samsung -  an industry-leading 14nm Exynos 64-bit Octa-core applications processor (AP) chip. 

Previous releases of the Galaxy S line relied primarily on Qualcomm System on Chip (SoC) for the bulk of the volume models and a home-grown Exynos AP and thin modem design for specific markets.  This announcement was largely anticipated as Qualcomm had indicated in their financial earnings in the few week prior that they had lost a key customer for their Snapdragon SoC.  However, Qualcomm is unlikely to be completely unseated from design slots within the Galaxy S6 as Samsung will surely be using Qualcomm-based thin modems in the Galaxy S6 for advanced LTE markets. 

While news of design wins and losses played out in the press during the weeks leading up to MWC, the most intriguing aspect of the announcement is the supply chain implications. Samsung decided to implement a brand new process geometry, creating larger supply-side demands for Samsung Electronic Foundry Solutions’ obligation to outside clients.  With the overwhelming positive response to the Galaxy S6, how will Samsung balance 14nm capacity with their existing foundry business clients?  How will supply chain scenarios play out against the inherent risk of being first to market with a new process geometry? 

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