Samsung Electronics is in talks with several smartphone makers including China's ZTE to supply mobile processor chips, a senior executive said, a move that will bring it in more direct competition with larger rival Qualcomm. In early 2018, the United States government banned American companies from selling components to China's ZTE for seven years after it was found out that ZTE had been illegally shipping goods made with USA parts to Iran and North Korea.
It hasn't been confirmed which OEMs are now in Samsung's sights, but given ZTE's recent debacle leaving the company on the verge of shutting down, the Chinese manufacturer could very well be roped into the discussion. Since the smartphone market is slowing down, Samsung is also hoping to start delivering 5G chips to the automotive industry, with Reuters reporting Audi is going to become its first client. Basically, this means that ZTE won't be able to use Qualcomm's chips inside its smartphones, so the Chinese company is looking for another supplier.
Samsung's System LSI business saw a 27 percent rise in shipments a year ago, Counterpoint says. Samsung generates most of its profits from its memory chips, and the report notes that it has been ramping up development of logic chips such as mobile processors, image sensors and automotive chips in a diversification attempt. He stated that the company is in discussion with "multiple automobile companies" to develop chips for autonomous driving, but did not name the vehicle makers.
In an interview, Inyup Kang, the head of Samsung's System LSI division, said the company is "talking to all OEMs" about the supply of chips.
In recent years, Samsung's semiconductor business has been one of the major profit generators for the company, even surpassing Intel last year in terms of volume.
Memory chips contributed about 96 percent of the profits in the semiconductor business, while System LSI and foundry took up the rest with about 1.44 trillion in 2017 operating profits.