Samsung to cut chip expenses with increased use of Exynos

Samsung plans to increase the use of Exynos processors in its Galaxy smartphones and tablets in 2024. The company is considering this move to keep costs down as chip prices increase globally. We might see MediaTek and Qualcomm chips in fewer Galaxy devices this year.

Samsung plans to put its Exynos processors in more Galaxy devices

Despite manufacturing Exynos processors in-house, Samsung uses chips from MediaTek and Qualcomm in a lot of Galaxy devices. Its foldables have always used Qualcomm’s Snapdragon processors, while S-series flagships have historically come with Exynos and Snapdragon chips. Budget and mid-range models also use Snapdragon and MediaTek’s Dimensity chips along with Exynos.

Last year, Samsung exclusively used Snapdragon in the Galaxy S23 series. This led to its AP (Application Processor) expenses growing almost 50% from 7.63 trillion won (approx. $5.7 billion) in 2021 to 11.38 trillion won (approx. $8.5 billion) in 2022. Since a substantial chunk of chip purchases for the Galaxy S23 series were likely made in 2022, the expenses increased that year.

Samsung returned to Exynos for the Galaxy S24 series. While the Ultra model still uses Snapdragon globally, the other two models ship with an Exynos chip in most markets. This helped the company keep the chip expenses for 2023 almost flat at 11.73 trillion won (approx. $8.8 billion), a 3% increase from 2022. However, it is still a lot higher than what Samsung spent in 2021.

While a global increase in chip prices may be the main reason, the Korean firm using more MediaTek and Qualcomm processors has also added to the cost. A recent report revealed that only 13 million devices shipped globally in Q4 2023 featured an Exynos chip, down 48% from the same period in 2022. Samsung’s revenue from chip sales also dropped 44% during this period.

Since Exynos chips are primarily used in Galaxy devices, this shows that Samsung is moving away from its in-house processors. This is a loss of business opportunity for the company’s semiconductor division, while the smartphone division is also incurring extra costs for buying chips from external brands. Increasing the use of Exynos processors in its Galaxy devices is a win-win for both divisions.

This strategic shift is already underway

Samsung has already begun shifting from MediaTek and Qualcomm chips to Exynos. It recently launched the Galaxy A35 with the Exynos 1380. Last year’s Galaxy A34 featured MediaTek’s Dimensity 1080. The Galaxy A25 also switched from MediaTek to Exynos. We may see a similar trend across other Galaxy lineups in the coming months. The new foldables are unlikely to use Exynos chips, though. The Galaxy Z Fold 6 and Galaxy Z Flip 6 should arrive in July.