Samsung shone the spotlight last week on an Exynos ModAP-powered LTE radio chip that supports both FDD and TDD, fabricated using the 28nm HKMG process.

With the integration of its own quad-core processor, Samsung is consolidating its cellular component under the Exynos brand—mimicking Qualcomm's Snapdragon family of mobile chips. The intention is clear: Get Qualcomm.

However, the amount of damage Samsung can wreak in today's totally Qualcomm-dominated LTE market remains unclear.

Samsung's move is destined to design Qualcomm's chips out of Samsung's handsets and tablets. But the LTE-app processor combo chip, which hasn't even hit the market yet, has already delivered the biggest blow. The casualty isn't Qualcomm. It's Broadcom, which announced plans in early June to shut down its cellular base band business.

No matter how you slice the LTE market, Qualcomm still has a solid lock on the mobile chip market. "Qualcomm still enjoys over 95 per cent of the multi-mode LTE market, even with new entries announced in 2014," Will Strauss, president of Forward Concepts, told us.

Strategy Analytics reported (subscription required) that Samsung ranked fourth in the LTE base band market in the first quarter with a revenue share of just 1.7 per cent.

Samsung isn't new to the LTE modem business. It has been shipping its own multi-mode 4G modem used inside its Galaxy 4 and 5 handsets, but the company has done so "only in Korea," according to Forward Concepts.

For handsets and tablets sold in the rest of the world, Samsung has relied on competitors' LTE modem chips. "Depending on the region, Samsung employed Qualcomm 4G modems, while they have employed 4G modems from Intel—actually, the Galaxy Tab 3 10-inch socket—and Marvell's and Renesas/Broadcom 4G modems in Galaxy Tab 3 seven-inch sockets," Strauss said. That picture is about to change.

Bigger impact on Broadcom

The industry views Samsung's announcements about its LTE/Modem combo chip and an LTE-Advanced modem—both based on Ceva's DSP—as "a genuine attempt by Samsung to legitimise its base band offerings for the first time," Strauss said.

To Qualcomm, which is already feeling rivals like Marvell and MediaTek nipping at its heels, Samsung's new LTE-app processor combo chip is one more worry.

"I fully expect that Qualcomm and others will be eliminated from future Samsung smartphones," Forward Concepts' Strauss said. However, "Samsung may still employ Intel and others in select tablets."

The Exynos ModAP's existence was evident even before it was announced. Industry analysts say Samsung's combo chip must have prompted Broadcom to divest its cellular base band business.

"I believe that Broadcom realised that they couldn't get in a major smartphone socket, and certainly not in a Samsung socket," Strauss said. Further, "since Samsung and Apple—namely, Qualcomm's modems—dominate the 4G smartphone market, only small pieces of the pie, mostly the Third World handset and tablet suppliers, were available to Broadcom, a market not big enough to support the hundreds of engineers they have devoted to 4G."

Sravan Kundojjala, a senior analyst at Strategy Analytics, agreed with that assessment. In addition to Samsung's LTE efforts, he said, Huawei's in-house LTE activities must have also weighed on Broadcom's decision to exit the base band market.

"The base band market is quite R&D intensive," Kundojjala said. "We estimate Broadcom has spent over $3 billion on cellular base band-related R&D since 2007 without profit. While it was painful for Broadcom to exit the market before even releasing Cat 6/Cat 7/Cat 9/Cat 10 LTE base bands and SoCs, it was the right decision in retrospect."

Heavily dependent on Samsung Mobile

For its LTE modem chip to become a truly visible factor in the market, Samsung will have to do more than gain design sockets in the its own mobile division's products.

"We believe Samsung's success in LTE base bands depends on how quickly it can diversify its customer base beyond Samsung Mobile and how quickly it can advance its LTE base band roadmap to match Qualcomm," Kundojjala said. "This will require significant investment and time."

Having built-in, internal design sockets is great. But that strategy can't last forever.

Samsung disclosed this week that its second-quarter operating profit dropped to a two-year low. The company cited the South Korean currency's appreciation against the US dollar and the euro. But the fourth straight quarter of profit decline has exposed an undeniable fact: Samsung has become too dependent on smartphones. It acknowledged this week that sales of its midrange and low-end smartphones were weak in China and some European countries, due to stiff competition and slow demand.

Like it or not, Samsung Mobile's struggle affects Samsung's mobile chip business, including the newly announced LTE-app processor combo chip.

By: DocMemory
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