Are you in or out?
Bloomberg is reporting that Samsung is planning on using quad-core processors from QUALCOMM, Inc. (NASDAQ:QCOM) as well as Exynos “octa-core” chips of its own designs.
There’s been much debate over what type of processor Samsung would use, since it was reportedly running into some problems with the Exynos 5 Octa related to power efficiency. Packing eight cores onto one chip comes at quite an energy cost, after all.
In and out
According to Bloomberg’s sources, the company will hedge its bets by using both chips. A Snapdragon will power the U.S. version of the Galaxy S IV, while an Exynos processor will be found in the international variants. Samsung has used this strategy before, including with its outgoing flagship Galaxy S III. From time to time, OEMs tailor devices to different geographical target markets.
For example, since the U.S. is the farthest along with the transition to 4G LTE, supporting LTE connectivity is critical for any high-end smartphone that has hopes of U.S. success. In most other parts of the world, 4G LTE networks are either inchoate or nonexistent. Many OEMs typically tap QUALCOMM, Inc. (NASDAQ:QCOM) for Snapdragon processors with integrated LTE for U.S. models. HTC’s 2012 flagship used a Snapdragon in the U.S. and an NVIDIA Corporation (NASDAQ:NVDA) Tegra in the international version, as well. NVIDIA just announced its first integrated LTE chipset, the Tegra 4i, which may put some heat on QUALCOMM, Inc. (NASDAQ:QCOM) in the smartphone ring.
Market it
Samsung will inevitably put a ton of marketing weight behind these octa-core processors, even though they function more like quad-core processors. The different cores are primarily to balance power and efficiency, but only four cores can be active at any given time. NVIDIA’s Tegra 3 used a similar concept, using four high-power cores for heavy lifting and one low-power core for the easy stuff. Samsung’s implementation of ARM Holdings plc (ADR) (NASDAQ:ARMH)‘s big.LITTLE technology will instead involve using four low-power cores alongside four high-power cores.
But with Samsung’s recent marketing blitz, consumers can expect some headlines about “the world’s first octa-core smartphone,” or something along those lines, even if it’s a tad misleading.
Samsung has also been aggressively gunning for Apple Inc. (NASDAQ:AAPL) over the past year with targeted ads. The company will likely come after the iPhone maker again, highlighting the fact that the iPhone 5’s A6 processor is a dual-core chip, while ignoring the fact that the cores inside are new custom designs with major performance gains. These cores are codenamed “Swift” and are comparable in performance to QUALCOMM, Inc. (NASDAQ:QCOM)’s Krait cores.
The South Korean company will probably also neglect the fact that most software and apps currently aren’t optimized to take full advantage of all those cores, but marketing is marketing.
All’s not lost
Still, even for the models that don’t pack QUALCOMM, Inc. (NASDAQ:QCOM) Snapdragons, the company will still probably turn up as the discrete baseband supplier, so all’s not lost. Samsung’s been working on its own LTE basebands, but QUALCOMM, Inc. (NASDAQ:QCOM) still has a significant technological lead.
The Galaxy S IV will intensify competition with Apple Inc. (NASDAQ:AAPL), and Cupertino’s response is at least a couple months away. Apple Inc. (NASDAQ:AAPL) is still the top U.S. vendor, selling 17.7 million iPhones (34% market share) in the fourth quarter. That topped Samsung’s 16.8 million (32.3% market share), but only by a hair.
This year may play out like last year. Samsung pulled ahead by mid-2012 due to a Galaxy S III launch and an Apple Inc. (NASDAQ:AAPL) slowdown ahead of the iPhone 5. Samsung may enjoy a strong second quarter, but Apple Inc. (NASDAQ:AAPL)’s next iPhone(s) will put it back in the lead come the third quarter.
The article Is Qualcomm In or Out of Samsung’s Galaxy S IV? originally appeared on Fool.com and is written by Evan Niu, CFA.
Fool contributor Evan Niu, CFA, owns shares of Apple and Qualcomm. The Motley Fool recommends Apple and NVIDIA. The Motley Fool owns shares of Apple and Qualcomm.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
