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SAMSUNG will become the sole manufacturer of Qualcomm's new flagship mobile chip, the Snapdragon 820, in a deal worth over US$1 billion.
This is the first time Qualcomm has used foundries other than TSMC to make its high-end chipsets, and represents a major win for the South Korean company, which is seeing flagging growth in its mobile device business, and competing with its bigger rival TSMC, who has had some major wins in the past few months.
TSMC had posted a better than expected profit for the previous quarter, but it too, is expecting challenging times ahead, as it is in turn impacted by falling demand in high-end smartphones.
While the order is not sufficient to turn Samsung's earnings around, analysts say that the deal indicates the company is succeeding in its efforts to diversify its revenue stream by growing its foundry business, and supplying components to other electronics companies.
The Snapdragon 820 uses the 14nm manufacturing process. Both TSMC and Samsung are rolling out next generation fabrication capacity, though TSMC is much larger than Samsung when it comes to revenue from the foundry business. Analysts expect that as Samsung launches mass production based on its 10nm technology, it will see greater patronage.