Samsung adopts DIY strategy for cellphone chips

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Samsung adopts DIY strategy for cellphone chips

By CAROLINE GABRIEL

Published: 2 January, 2009

READ MORE: Samsung | Semiconductor

Samsung aims to be far more self-reliant in terms of handset baseband chips when it comes to next generation networks, and is planning a major new line of LTE and WiMAX silicon.

The Korean giant has traditionally had a broader base of chip suppliers than Nokia, though both companies have been extending their supply chain in the past two years to gain better pricing and stronger innovation. But while Nokia is gradually shifting away from customized silicon in many areas towards a merchant model, Samsung aims to reduce its costs, and its payments of royalties, by relying more heavily on its internal chipmaking resources.

The company is working on its new line of LTE and Mobile WiMAX products, as well as media accelerators, and plans to sell the latter outside its own group too. Like other handset majors, it is concerned to reduce its patent royalty liabilities as it fights to drive down the cost of its products in order to address emerging markets, and credit crunched consumers, without destroying its margins.

Young Cho Chi, senior VP of strategic planning for Samsung's telecom division, told a recent conference that the company was already sampling its Mobile WiMAX chipsets to engineers inside and outside Samsung. It aims to be among the first three phonemakers to release LTE handsets, but its chips are at too early a stage of development for the decision to be made whether these phones should use homegrown silicon or an external supplier.

Significant reliance by Samsung on its own chipsets could hurt its key partners, the largest of which is Qualcomm. The CDMA giant has already lost out in some areas of Samsung, as the Korean company has been diversifying its supply chain and buying baseband chipsets from Broadcom and Infineon too. These two companies, along with STMicro, are also key partners for Nokia, since the Finnish company decided in 2007 to reduce its dependence on Texas Instruments. One important factor, as pointed out by EETimes, is that Broadcom and Infineon both use a software stack from Comneon, a joint venture between Infineon and InterDigital, that reportedly does not depend on Qualcomm IPR. Korea has been in the forefront of the campaign to reduce payments of royalties to Qualcomm, having been one of the original and most important backers of the CDMA platform.