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Why Samsung uses Qualcomm in the US?

The answer to this question is very complicated. However, the short answer would be – Samsung uses Qualcomm processor in the US because of a business agreement they made with Qualcomm. According to the deal, Samsung would ship phones into the US with only the Qualcomm processor. In return, Samsung would fabricate the Snapdragon processor. Moreover, Qualcomm holds all the critical CDMA patents. If Samsung wants to ship phones with Exynos processors into the US, they have to pay a hefty royalty for the CDMA modem. According to cost analysis, for now, shipping phone with Qualcomm processor is more cost-effective for Samsung.

CDMA patent dispute with Qualcomm:

Besides a processor, a phone needs many other essential parts. The phone must have another crucial component, a modem. This modem allows you to communicate with others through a mobile network and makes your handheld device a phone.

In the US, cellular companies use two technologies to build their cellular network, either GSM or CDMA. In the US, there is four leading cellular company — Verizon, Sprint, T-mobile, and AT&T. Verizon and Sprint use CDMA on their network, whereas AT&T, T-mobile, and rest of the world use GSM technology.

So, if Samsung wants to target a more extensive user base in the US, they need to sell a phone with a modem supporting both GSM and CDMA technology. On the market, currently, there are two high-performance processors — Qualcomm’s Snapdragon processor and Samsung’s Exynos processor. But, Samsung’s Exynos processor does not have a CDMA modem built-in, while Qualcomm’s processor has. To target all the customers in America, Samsung ships its phone with Qualcomm’s processor in the US.

You may ask then why Samsung does not include the CDMA modem in their Exynos processor? The answer is, legally, they can’t. The history dates back to circa 1993. 

Qualcomm holds all the essential technological patents that are crucial to building a CDMA modem. In 1993, Samsung and Qualcomm agreed that Samsung would pay Qualcomm a royalty if they ever want to use a CDMA modem. For the US market, it is cheaper for Samsung to use Qualcomm’s processor instead of using Exynos chipset with a royalty laden CDMA radio modem. However, other than a few countries, Samsung ships all their phone with an Exynos chipset that only supports GSM.

Snapdragon has real-world better performance:

Snapdragon vs. Exynos’s debate only arises when people see that a newly released Samsung phone with an Exynos chip has a higher benchmark score than the same phone with Qualcomm’s Snapdragon processor. But we need to understand that a higher benchmark score is no way an indication of better real-world phone performance. We saw numerous reports where phone manufacturer overclocks their phone processor to get a better benchmark score. Even Samsung did it.

Samsung’s Exynos processor has short term higher performance but very poor optimization and thermal management system. On the other hand, Qualcomm’s Snapdragon processor is better optimized and has an excellent thermal management system. So, though Exynos spits out a higher benchmark score, however, on a long-duration test, Exynos overheats, and its performance takes a nosedive. Moreover, because of this poorly optimized Exynos processor, Samsung phones have a short battery life. On the contrary, we have seen that the Snapdragon’s processor is consistent with its performance and has good battery life. If your Samsung phone’s battery is draining quickly, the probability is that your phone has an Exynos processor.

Apple sued Qualcomm for price gauging.

Price negotiation strategy:

If you are using a Samsung phone, you will notice that you have numerous apps on the phone that do similar jobs. For example-

Email:

  • Samsung Email
  • Gmail

Appstore:

  • Samsung Appstore
  • Google Play

Payment:

  • Android Pay
  • Samsung Pay

Browser:

  • Chrome
  • Samsung Browser

Online Storage:

  • Google Drive
  • Microsoft Drive

Samsung intentionally does it. Though Samsung uses the Android OS, which Google made, Samsung does not want to rely on Google and be a hostage entirely. Samsung wants to make its software ecosystem. They want some leverage for price negotiation or other things. Google requires that any phone manufacturer that wants Google Play Store access must pre-install specific google apps on their phone, such as Google Maps, Google Drive, YouTube, Chrome, Google Search, etch. But at the same time, Samsung ships its phone with a similar app alternative to Google’s apps. Samsung also has developed a mobile OS called Tizen, an alternative to Android. Samsung does it to protect itself from any undue pressure from Google in any shape or form.

Samsung makes millions of phones each year, and they need millions of processors. They make the Exynos processor; an alternative to Qualcomm’s Snapdragon. It’s not only cheap but also gives them bargaining power for the Snapdragon processor. It also opens doors for multiple processor sources for their mobile. So, in case of emergency, their phone production will not suffer due to a lack of Snapdragon processor.

A prime example would be Snapdragon 810. Samsung could not use that processor because of a heating issue. That time Samsung shipped all their Galaxy S6 phones with Exynos processor worldwide, including the US. Though they paid more because they had to pay the CDMA modem royalty, they did not lose the US market for the flagship Galaxy S6.

Though Samsung sells phones with Qualcomm processors in the US, they ship all their phones worldwide with the Exynos processor. This strategy enables them to keep Qualcomm in check on the processor price. Otherwise, they would have a monopoly on processor business, and mobile companies would have to pay whatever Qualcomm asked for their processor.

Business deal:

Samsung designs and fabricates its Exynos processor. However, Qualcomm only designs but does not make their processor. To manufacture their processor, they rely on other chip manufacturers like Samsung. It’s like Apple. They design the iPhone, but their partner Foxconn manufactures it.

Each year, Qualcomm sells millions of chips. So, any company that takes this processor manufacturing order would earn billions of dollars in revenue. Qualcomm chose Samsung to fabricate these Snapdragon processors. In return, Samsung agreed to ship phones with the Snapdragon processor into the US.

Conclusion:

Because of all the above-mentioned reasons, Samsung uses Qualcomm processor in its phone in the US.