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article imageSamsung to exclusively build the chip inside 2016's top phones

By James Walker     Jan 14, 2016 in Technology
Samsung has reportedly scored an exclusive contract to manufacture Qualcomm's Snapdragon 820 flagship mobile processor in a deal worth over $1 billion. Samsung already builds its own Exynos-branded processors as well as the chips in Apple's iPhone.
As ZDNet reports, Samsung announced today that production of processors using its second-generation 14nm FinFET manufacturing process has begun. The upgraded 3D transistor structure allows for up to 15 percent greater performance and 15 percent less power consumption over Samsung's original 14nm process, important characteristics for chips to be used in mobile devices.
The process will be used for Samsung's own Exynos 8 Octa processor but the company is clear that its foundries are also open to third-parties. It noted Qualcomm in particular has designed the Snapdragon 820 around its 14nm process, a major contract as Qualcomm is currently the largest chipset manufacturer in the market with over 60 percent total share.
Today, the company announced that Samsung is its only production partner for the Snapdragon 820. Reuters reports that Qualcomm is expected to place over $1 billion worth of orders for Snapdragon 820 chips before phones start launching in the first half of 2016.
In an email to Reuters, Qualcomm confirmed Samsung has exclusive manufacturing rights for the processor. According to analyst Kim Eng, the deal is "very significant" because Qualcomm has relied on rival foundry TSMC in the past. Eng told Reuters that he expects Qualcomm to continue placing orders with Samsung past 2016 as the company develops its even smaller 10nm technology.
Charlie Bae, Executive Vice President of Sales & Marketing for Samsung's System LSI Business, said of today's news: "We are pleased to start production of our industry-leading, 2nd generation 14nm FinFET process technology that delivers the highest level of performance and power efficiency. Samsung will continue to offer derivative processes of its advanced 14nm FinFET technology to maintain our technology leadership."
Obtaining manufacturing rights for the Qualcomm Snapdragon 820 will give Samsung a needed boost in revenue in 2016. The company has been suffering from declining smartphone sales as the global market has become saturated and competition stepped up from rivals including Apple, Huawei and Xiaomei.
Samsung already produces some of the chips used in Apple's recent iPhones and iPads as its foundries begin to match TSMC's levels of expertise. For the iPhone 6s, Apple split its orders between Samsung and TSMC, buying chips from both to cover demand for the popular handsets. Currently, neither firm has the capacity to singlehandedly build the millions of units requested by Apple ahead of the iPhone 6s' launch.
The Qualcomm Snapdragon 820 is a much-anticipated processor, not least because it hopes to set right the issues that plagued 2015's Snapdragon 810. The chip was plagued by claims of overheating and thermal throttling, leading to a hardware revision to try to cure the problems. Qualcomm consistently denied there was a design flaw with the 810 but that didn't stop several major manufacturers choosing its less powerful Snapdragon 808 instead for their premium handsets.
The first phone to be unveiled with a Snapdragon 820 inside is the Chinese LeTV Le Max Pro. The phablet-sized 6.3-inch handset will be LeTV's first attempt at a U.S. launch and features capable high-end specifications with 4GB of RAM, a 21-megapixel rear camera and up to 128GB of internal storage. LeTV is so far remaining quiet on pricing and availability details, presumably in part because it can't even start building the phones until Samsung gets the first batch of Snapdragon 820 processors built.
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