(FROM THE WALL STREET JOURNAL 2/2/15)
By Don Clark
Qualcomm Inc.'s flagship chip won't appear in a much-anticipated
smartphone from Samsung Electronics Co. this year. But the reason
may have more to do with competing technology from the South Korean
company than with rumored problems with Qualcomm's chips.
San Diego-based Qualcomm on Wednesday cited its failure to win a
spot for its Snapdragon 810 chip in one high-profile smartphone as
among several factors leading to a reduced revenue forecast for
2015. Qualcomm's shares have fallen 12% since the forecast, cutting
about $14 billion from its market value.
Qualcomm didn't identify the smartphone or its maker by name,
but industry executives and analysts say they believe the company
was Samsung. They expect the company to use a version of an
internally developed chip called Exynos for a coming high-end
smartphone called the Galaxy S6.
A recent Bloomberg report linked Samsung's decision against the
Snapdragon 810 to overheating problems with the chip. Qualcomm
executives declined to discuss the subject in detail, but the
company plans to issue a news release Monday with quotes from
mobile-phone makers to undercut the notion that there are technical
problems with the chip.
"There is a lot of misinformation out there about what is really
happening," Cristiano Amon, a Qualcomm executive president who
serves as co-president of the company's chip business, said Friday.
"We feel very confident about the 810's leadership."
The Snapdragon 810, which combines computing and communications
functions -- capabilities that sometimes reside on separate chips
-- has distinguishing features that include support for
ultrahigh-resolution video and extremely fast wireless
technology.
Analysts have rated Qualcomm's recent Snapdragons as faster than
existing Exynos chips, which Samsung has used in some past phones.
But the next Exynos model could have a key difference.
Samsung's production lines recently began churning out chips
based on its latest big advance in manufacturing technology. New
production processes, which shrink the size of transistors on
chips, can improve their performance and power consumption while
also reducing their size and production cost.
Samsung hasn't disclosed technical details of the next Exynos,
and a company spokesman declined to comment on issues surrounding
the Galaxy S6 smartphone. But Samsung is widely expected to build
the chip with its new production recipe, which creates transistors
measured at 14 nanometers, or billionths of a meter. Qualcomm's
Snapdragon uses 20-nanometer circuitry.
Samsung smartphones could use some new selling points. The
company on Thursday reported a 64% drop in quarterly operating
profit from mobile phones, while Apple's iPhone unit sales in the
same period surged 46%.
Samsung executives, during a conference call Thursday, spoke
optimistically about prospects for 14-nanometer production for use
by both internal and external customers. They also said the company
is in talks with other companies about using its Exynos processor
in their products.
It isn't clear whether Samsung might use Qualcomm wireless chips
in the Galaxy S6 alongside the Exynos processor, or whether Samsung
might pick the Snapdragon 810 for other handsets. "I'm not
expecting Samsung to drop Qualcomm across the board," said Patrick
Moorhead, an analyst with Moor Insights & Strategy.
---
Jonathen Cheng and Min-Jeong Lee contributed to this
article.
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