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Samsung pits itself against Qualcomm in LTE

Posted: 15 Jul 2014     Print Version  Bookmark and Share

Keywords:Exynos  Samsung  LTE  Qualcomm 

The Exynos ModAP's existence was evident even before it was announced. Industry analysts say Samsung's combo chip must have prompted Broadcom to divest its cellular base band business.

"I believe that Broadcom realised that they couldn't get in a major smartphone socket, and certainly not in a Samsung socket," Strauss said. Further, "since Samsung and Apple—namely, Qualcomm's modems—dominate the 4G smartphone market, only small pieces of the pie, mostly the Third World handset and tablet suppliers, were available to Broadcom, a market not big enough to support the hundreds of engineers they have devoted to 4G."

Sravan Kundojjala, a senior analyst at Strategy Analytics, agreed with that assessment. In addition to Samsung's LTE efforts, he said, Huawei's in-house LTE activities must have also weighed on Broadcom's decision to exit the base band market.

"The base band market is quite R&D intensive," Kundojjala said. "We estimate Broadcom has spent over $3 billion on cellular base band-related R&D since 2007 without profit. While it was painful for Broadcom to exit the market before even releasing Cat 6/Cat 7/Cat 9/Cat 10 LTE base bands and SoCs, it was the right decision in retrospect."

Heavily dependent on Samsung Mobile

For its LTE modem chip to become a truly visible factor in the market, Samsung will have to do more than gain design sockets in the its own mobile division's products.

"We believe Samsung's success in LTE base bands depends on how quickly it can diversify its customer base beyond Samsung Mobile and how quickly it can advance its LTE base band roadmap to match Qualcomm," Kundojjala said. "This will require significant investment and time."

Having built-in, internal design sockets is great. But that strategy can't last forever.

Samsung disclosed this week that its second-quarter operating profit dropped to a two-year low. The company cited the South Korean currency's appreciation against the US dollar and the euro. But the fourth straight quarter of profit decline has exposed an undeniable fact: Samsung has become too dependent on smartphones. It acknowledged this week that sales of its midrange and low-end smartphones were weak in China and some European countries, due to stiff competition and slow demand.

Like it or not, Samsung Mobile's struggle affects Samsung's mobile chip business, including the newly announced LTE-app processor combo chip.

- Junko Yoshida
  EE Times

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