Samsung’s SoC Spending Soars: Smartphone Chip Investments Up 10.4% in Q3 2023

Earlier this year, Samsung launched its flagship Galaxy S23 series of smartphones. Unlike the Galaxy S22 series, which offered different SoCs for different markets – either the first-generation Snapdragon 8 or the Exynos 2200 – the Galaxy S23, Galaxy S23+, and Galaxy S23 Ultra models all feature Qualcomm’s custom second-generation Snapdragon 8 platform.

Recent online disclosures reveal that, up to the third quarter of 2023, Samsung spent a substantial $6.943 billion on SoCs for its smartphones, marking a 10.4% increase compared to the same period last year. This figure represents a staggering 204% increase from the $2.3 billion expenditure in 2019.

This trend is not likely to change in the short term, with projections suggesting a continued rise in these costs in 2024. Rumors indicate that Qualcomm’s latest third-generation Snapdragon 8 is more expensive than its predecessor, and next year Qualcomm is expected to introduce the fourth-generation Snapdragon 8, featuring custom Oryon cores integrated with NUVIA technology. Chris Patrick, Qualcomm’s Senior Vice President and General Manager of Mobile Business, has already hinted at potentially higher pricing.

As the world’s largest smartphone manufacturer, Samsung’s reliance on Qualcomm’s high-end SoCs is impacting its profit margins. Recent reports suggest that Samsung may not upgrade the memory in the Galaxy S24 series, sticking to 8/12GB configurations and forgoing a 16GB option. This decision is likely motivated by cost-cutting considerations.

Samsung will certainly continue to advance the development of its Exynos series SoCs – a point that cannot be overstated, given the potential to save billions of dollars. Should Samsung fail to find an appropriate solution to this challenge, it may find itself in a vicious cycle, potentially leading to consumer disinterest in future Galaxy S series products and a consequent decrease in Samsung’s brand value.