“Exynos, Trust only you”, Samsung Electronics to fight back

[Korea Financial Times, Kim JaeHun] Samsung Electronics is making a desperate effort to become independent in the ‘mobile application processor (AP)’ that serves as the brain of smartphones.

Although its own AP ‘Exynos series’ is not yet 100% competitive, it is determined to succeed in internalization as the burden of smartphone manufacturing costs is increasing due to the surge in AP prices.

According to the industry, Samsung Electronics has started work on mass production of the latest Exynos 2600 with the goal of installing it in the flagship smartphone lineup ‘Galaxy S26 series’ to be released in 2026. It is known that the Exynos 2600 design was completed in the System LSI division in the first half of this year and has entered the foundry stage.
Along with this, there are reports that wafers for the mass production of Exynos 2500 have been introduced at the S3 foundry plant in Hwaseong, Gyeonggi Province. It is reported that the Exynos 2500 is aimed at installing it in the Galaxy Z Fold and Flip 7 series, which are scheduled to be released in the second half of next year.

In fact, the Exynos 2500 was scheduled to be installed in the Galaxy S25 series, which is scheduled to be released in the first half of next year. However, it is interpreted that the decision was made to wait and shift to installing the fold and flip in the second half of the year due to the yield (good product ratio) issue that remained at the 20% level.

Since the yield issue occurs at the foundry stage, not the design stage, it seems that it can be resolved by upgrading the process. Samsung Electronics is currently making all-out efforts to recover the yield, such as by expediting the conversion to the latest 2nm (1㎚=1 billionth of a meter) process at the Hwaseong S3 plant.

The AP is a chip that acts as the brain of a smartphone and is a key component that determines the performance of the device. It is also an important factor in smartphone price competitiveness, accounting for more than half of the device manufacturing cost. In particular, with the advent of the AI ​​smartphone era this year, demand for high-performance AP chips is increasing, and prices are also on the rise.

Accordingly, the success or failure of the Exynos series is an important factor not only in Samsung Electronics' smartphone competitiveness but also in the rebound of the DS division's foundry division and LSI division. Exynos has been designed by the LSI division and mass-produced by the foundry division.
Samsung Electronics has been installing Exynos as the standard processor for its smartphones and Qualcomm's Snapdragon in its premium products.

However, the Galaxy S22 Exynos 2200 caused problems in 2022, causing difficulties. Samsung Electronics excluded Exynos from all Galaxy smartphone series last year, including the Galaxy Z Fold and Flip 4 released thereafter and the Galaxy S23 series.

As Exynos slumped, Samsung Electronics' LSI division recorded an annual loss last year, and its global AP market share also fell from 8% in 2022 to 5% last year and 2% this year.

This year, the world's first AI smartphone, the Galaxy S 24 series, was equipped with some Exynos 2400s, but the Galaxy Z Fold and Flip 6 released in the second half of the year again excluded Exynos, failing to create any significant reversal.
Samsung Electronics' manufacturing cost burden also increased as it applied Qualcomm Snapdragon. According to business reports, etc., Samsung Electronics' AP purchase amount in the first half of this year was KRW 6.03 trillion, an increase of about KRW 280 billion year-on-year.

Looking at it by year, the AP purchase price in 2021, when Exynos and Snapdragon were installed in parallel, was KRW 6.02 trillion. In 2022, when Exynos began to be excluded, it soared to KRW 11.379 trillion, and showed an upward trend to KRW 11.732 trillion in 2023. The price of the Galaxy smartphone series also increased along with this. It is expected to exceed KRW 12 trillion this year due to the increase in AP prices.

Samsung Electronics is accelerating the transition to the latest 2nm (1㎚=1 billionth of a meter) foundry to improve yield, which is the key to the Exynos rebound.

In particular, the ‘Gate All Around (GAA) process’, which has accumulated know-how through trial and error in the current 3rd generation process, is expected to be a game changer in 2nm.

In addition to its own foundry, it is also considering outsourcing to external foundries such as TSMC. By cooperation, the plan is to capture both price and demand with the best products.

In fact, Samsung Electronics also expressed its intention to cooperate with external foundries in the 3rd quarter earnings announcement conference call to improve yields for not only HBM (high bandwidth memory) but also system semiconductors.

Kim JaeHun (rlqm93@fntimes.com)