Analyst: Top smartphone makers will continue dual-source processor strategy

Qualcomm phone processor
Qualcomm's Snapdragon processor will continue to be used in smartphones from Samsung, noted IHS Markit analyst Jusy Hong. (Qualcomm)

The past year has seen a marked shift for several large smartphone suppliers to develop their own processors rather than use third-party vendors. A recent report from IHS Markit noted that Samsung and Huawei were moving away from third-party vendors like Qualcomm for some of their mid-tier smartphones. An analyst for IHS Markit, Jusy Hong, explained in a recent e-mail conversation with FierceElectronics that top-tier smartphone vendors will utilize both in-house processors and third-party processor sourcing for their smartphones for the foreseeable future.

Hong said technology shifts and cost concerns played a key role in Huawei shifting from Qualcomm to MediaTek. “Huawei has been increasing in-house process deployment for some time as a part of [an] effort to increase cost efficiency and technology leadership in smartphones,” Hong said. “Evolution in AI and neural engine accelerates the big smartphone giant to increase its own chipset development. Qualcomm used to be the second biggest supplier after in-house, but MediaTek becomes the second biggest.”

Hong emphasized that Huawei’s move to source its own processors would be only for selected phones and not the entire smartphone line. Hong said the decision “is not only [a] matter of cost efficiency but supply-demand, strategy relationship, contingency plan, future strategy including future AI and Neural engine and product planning. The big giants want to shift from current hardware manufacturer to market leader in mobile industry.”

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Hong added, “Huawei won’t use Qualcomm’s processor for their flagship." But Hong noted that Samsung would continue to use Qualcomm’s Snapdragon, a high-performance processor, for its flagship Galaxy S model along with Exynos. “And Qualcomm’s Snapdragon will be the first choice for other smartphone OEMs, Xiaomi, Oppo, Vivo, Google and so on, for their flagship device,” Hong said.

“Although Samsung has increased adoption of its own chip for mid and low-end smartphone line-ups, it will continuously depend on Qualcomm for flagship products,” Hong explained. “Qualcomm’s processor is known to perform better than Exynos in many ways. And it would be not easy for Samsung to overcome Qualcomm.”