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Samsung to produce Qualcomm's mobile app processors

2014/07/16 15:56

SEOUL, July 16 (Yonhap) -- South Korea's tech giant Samsung Electronics Co. is expected to produce mobile application processors for Qualcomm Inc., industry sources said Wednesday, strengthening its earnings outlook for the chip division while its smartphone business lags.

While Samsung declined to comment on details such as the size and period of the production, citing confidentiality terms with its clients, sources privy to inside information confirmed the deal.

Samsung's foundry business, which makes chip designs for other companies that do not have a semiconductor fabrication plant, has companies like Apple Inc. as its customers.

Industry watchers said Samsung will likely supply processors that adopt what is called a 14 nanometer FinFET process technology, which uses a three-dimensional process to enable a more efficient power usage than the traditional planar process.

A mobile application processor functions as the "brains" of smartphones, similar to a central processing unit (CPU) of personal computers.

While Qualcomm dominated the world's mobile application processors market at 52.4 percent in terms of sales last year, followed by Samsung at 8 percent, the U.S. fabless player does not have manufacturing facilities of its own.

Although Samsung currently dominates the semiconductor market, including dynamic random access memory (DRAM) chips and NAND flash sectors, its weak performance in the mobile application processors has been cited as one of the major drags on the company's earnings.

The South Korean tech giant accounted for 37.2 percent of the world's DRAM market in terms of sales in the January-March period, data compiled by IHS iSuppli showed. If Samsung retains its top spot through December, it would be dominating the DRAM market for the 23rd consecutive year.

Samsung also accounted for 37.4 percent of the NAND market in the first quarter of 2014, trailed by Japan's Toshiba Corp. with 31.9 percent. U.S.-based Micron Technology Inc. garnered 20.1 percent of the market. Local rival SK hynix held a comparable figure of 10.6 percent.

Samsung, the world's biggest technology firm by revenue, estimated last week its second-quarter operating profit at a sharply lower-than-expected 7.2 trillion won (US$7.01 billion). The estimate represents a 24.4 percent fall from its operating profit of 9.53 trillion won last year.

colin@yna.co.kr

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