Samsung can save Galaxy S25 Ultra and Watch 8 from higher prices... with a 2nm Exynos
Samsung announced that it will be able to craft a 2nm Exynos mobile chipset processor as soon as next year, and it may use it as a shield against raising the prices of its best phone and wearable for 2025.
Chipsets become the priciest phone component
Qualcomm keeps adding AI features to its mobile Snapdragon chipsets, and raising their wholesale prices in the process, so Samsung had to pay a lot more for the Snapdragon Gen 2 than it had for a Gen 1 where AI was still a twinkle in the eye of Qualcomm's engineering team.
In fact, the most expensive component in the Galaxy S23 Ultra, according to Counterpoint's BOM report, is none other than the processor and modem combo of Qualcomm, known as the chipset:
The Snapdragon 8 Gen 2 chipset commands a third of the S23 Ultra's production costs | Image credit — Counterpoint
Gone are the days when expensive OLED displays were a nascent technology and were the priciest component in phones. Now that they all have dynamic refresh rate and wide color gamut coverage capabilities, the focus has moved to AI processing power and global 5G connectivity band support.
The R&D efforts in those fields don't come cheap, and Qualcomm is recouping its research investments via generous markups on each passing Snapdragon generation. If you thought that the $160 that Samsung pays to Qualcomm for its Snapdragon chipsets now is excessive, reputed analyst Ming-Chi Kuo has a surprise for you.
The SM8750 (Snapdragon 8 Gen 4), which will enter mass production in 2H24, is expected to be priced 25–30% higher than the current flagship chip SM8650 (Snapdragon 8 Gen 3) at $190–200. This price increase is primarily due to adopting TSMC’s latest and more expensive N3E node. Benefiting from the AI-driven demand for high-end smartphones, the SM8750’s shipments will grow at a high single-digit rate vs. the SM8650.
Ming Chi-Kuo, industry analyst, June '24
Now that Qualcomm has a deadlock on Galaxy AI feature processing combined with and 5G modem exclusivity for the US, Samsung will have to go with the flow and equip the Galaxy S25 Ultra with a Snapdragon 8 Gen 4 chipset, at least on this side of the pond.
Those constant price increases of AI processing power have brought about record stock price for Qualcomm and other AI chip makers, too.
Qualcomm's price is riding high on record mobile chipset and modem prices | Image credit — Google Finance"
According to Mr. Kuo, however, Qualcomm will be returning to TSMC for the Snapdragon 8 Gen 4 tapeout on account of its superior 3nm production method that the iPhone 16's Apple A18 chipset will also be crafted with.
Superior foundry technology comes with higher costs, though, so Qualcomm will reportedly have to price the Snapdragon 8 Gen 4 30% higher than its predecessor that is in the Galaxy S24 Ultra. This means that the processor in the S25 Ultra will likely cost $200 apiece for Samsung, and will undoubtedly grab an even larger share in its bill of materials.
Samsung won't raise the Galaxy S25 Ultra and Watch 8 prices
A 30% cost bump of your most expensive phone component won't be a laughing matter for Samsung, but it already raised the Galaxy S24 Ultra price by a Benjamin. It would be tough to justify another $100 S25 Ultra price bump for something that is under the hood and is not user-facing like a refreshed design, a second periscope camera, or some display breakthrough.
Thus, Samsung may try to work around the Snapdragon 8 Gen 4 price increase to keep the Galaxy S25 Ultra price the same, and the unlikely hero in this scenario could be its own Exynos line of mobile chipsets.
At the recent Samsung Foundry Forum 2024 expo, the semiconductor maker shared its plans for the development and release of its next generation chipsets made with the nascent 2nm technology.
Samsung's new 2nm roadmap pulls the Exynos 2600 release forward | Image credit — Samsung
Samsung bragged that its mobile processor division will have 2nm chips on the market as soon as next year, perhaps in time for the Galaxy S and Watch lines releases that are currently powered by 3nm chipsets. That is a bit earlier than the rumored 2026 release for the next-gen Exynos 2600 chipset that is supposed to ditch the AMD GPU in favor of Samsung's own design.
If Samsung manages to introduce enough 2nm Exynos 2600 chipsets in the Galaxy S25 series processing power mix, it will have a good chance to offset Qualcomm's Snapdragon price increases. Ditto for the Galaxy Watch 8 and a prospective 2nm upgrade to the penta-core 3nm Exynos chip that will reportedly be in the Galaxy Watch 7 series.
In short, even if Qualcomm twists its customers' hands with a $200 Snapdragon 8 Gen 4 chip made by TSMC, Samsung would have little recourse to raise the Galaxy S25 Ultra price further, and could save on production costs in other ways to compensate, instead of eating the difference.
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