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WITH increasing numbers of smartphone vendors pursuing in-house processor development, leading mobile chip makers find themselves under pressure, says TrendForce.
While smartphones enjoyed a long period of high growth, since 2014, global smartphone shipments have declined annually. Smartphone shipments for 2016 will grow by just 7.3 percent year on year.
Vendors are using self-developed processor chips as their main strategy to maintain market shares, differentiate their products, and ensure profitability during the current period.
However, TSMC, the global leader in the semiconductor foundry business, will benefit from this trend. Smartphone vendors, seeking to get the best performance out of their in-house application processors, will seek to use TSMC's 16nm technology to manufacture their chips.
Their contracts with the foundry giant may even include the use of integrated fan-out wafer-level packaging (InFO WLP) technology. With the semiconductor market evolving rapidly, TSMC’s client base will continue to shift, from the initial customers such as AMD and NIVIDIA to AP leader Qualcomm and then to major smartphone vendors including Apple and Huawei.
Apple's strategy is based on maintaining the highest level of hardware-software integration, even if the key components found in its phones, such as memory, display and camera are not of the highest specification. The hardware-software co-design approach, however, leads to best overall performance and user experience.
Samsung, in the meantime, is getting rid of excess capacity at its foundry unit by manufacturing smartphone chipsets in-house. At the moment, only around 20 percent of the company's smartphones utilise the in-house chips. But an increase in this percentage will allow Samsung to gradually reduce its reliance on outside suppliers.
Huawei is developing its own chips in order to improve its bargaining power and reduce its dependence on Qualcomm and MediaTek. Huawei uses its IC design subsidiary HiSilicon to put pressure on these chip makers to obtain better prices, while also improving its hardware-software integration.