We have gone through the part one of why Samsung is becoming the bigger smartphone company all over the world. The current political situation is bringing numerous benefit for Samsung’s smartphone and 5G infrastructure business. But there’s even more to this. Something like 30% of Samsung’s revenue right now is actually from its semiconductor business – which means selling chips. And while this division are losing some certain profit in the short term because Samsung used to sell bits and pieces to Huawei for their phones; in the long term, it’s looking pretty good.
For starters, Huawei was one of the few other companies who made mobile chipsets. Every year they’d come up with an increasingly advanced Kirin chip to power their flagship phones. But the U.S. ban makes this almost impossible. It’s looking likely that after 2020, Huawei just won’t be able to do it anymore. So that’s 20% of the market that used to be powered by Kirin is now open to being powered by Samsung. Plus, looking at the next generation chipsets are going to be built on the tiny fabrication process, and it looks like Samsung was ready for this. It looks like Samsung has built the processes to be able to manufacture 5nm chipsets with relatively high efficiency.
And that means two things:
- Samsung’s next Exynos processors should be way higher performance, and this is backed up by Ice Universe, who also adds that in 2022 they’re gonna start building an AMD graphics core – which might even flip their current Achilles heel into a strength.
- Apparently Samsung, as well as building their own, have been picked to build the next Qualcomm Snapdragon 875 chips too. Samsung’s supposed efficiency means that they can offer a 5nm chip to Qualcomm for less than TSMC, who Qualcomm usually works with.
So, Samsung rakes in money from Qualcomm, and at the same time, might just be able to build their own Exynos chipset, which is comparable. And if they can do that, they will fly. Because while Samsung can then happily use their own Exynos chips in their phones for no extra cost, every other Android maker will either have to fork out an extra 30 to 50 dollars to buy one from Qualcomm, or come straight to Samsung and buy an Exynos chip for their phones. Either way, Samsung wins. They’re in a position where they can leverage their 5G and their chipset business to push their mobile phone business forward.
I mean, obviously they do still have Apple to compete with, but if the U.S cut ties with China, then I think even Apple will struggle. Because it’s very possible that China will retaliate with the same sentiment: no one in China buys an iPhone. And even though this doesn’t really directly help Samsung because Samsung has almost no market share in China, it would hurt Apple. Besides, a lot of Apple manufacturing happens in China too, which means that if they are pressured to pull out, it might well mean they have to raise their prices for the rest of the world.
But, to be fair, just generally, I would argue that Samsung isn’t particularly worried about Apple. I think the average consumer is actually quite averse to jumping between Android and iOS, which means that if Chinese Android brands fall in popularity, their users are way more likely to turn to Samsung as opposed to iPhones. Plus, Samsung just serves a much wider net of users than Apple. Everything from the budget section, which Apple doesn’t dare build for, to foldable smartphones. Apart from Chinese companies, the only foldable competition Samsung faces is from Motorola. Judging from the quality of the available foldable smartphones from Motorola, Samsung would pretty much have the entire foldable market for themselves.
So, the U.S. and China have been having a pretty hard time with each other, and intentionally or not, I feel like Samsung’s in the perfect position to gain from this. And because a lot of the world follows the U.S.’s lead, if this carries on (which is highly likely), then this won’t just be some small win for Samsung in the United States, this will be a global victory. And it could well be self-reinforcing if all of the sudden 40% of smartphone users become Samsung users, then Samsung’s gonna sell more appliances. They’re gonna sell more TVs, and more services, all of which will be made to work with each other.
There was a time when people say that only Apple could build an ecosystem like that for its users. But with the current situation now, perhaps Samsung will be the corporation to dominate the smartphone market worldwide, and then dominate the whole electronic market worldwide.