Qualcomm reduces outlook due to Samsung chip loss

The absence of its Snapdragon SoC in Samsung’s latest flagship smartphone – the Galaxy S6 – weighed heavily on Qualcomm’s Q1 2015 earnings announcement.

“While we remain confident in the significant growth opportunities ahead, we are reducing our QCT outlook for fiscal 2015, primarily due to the increased impact of customer share shifts within the premium tier and a decline in our share at a large customer,” said Qualcomm CEO Steve Mollenkopf.

“In addition to our ongoing expense management initiatives, we have initiated a comprehensive review of our cost structure to identify opportunities to improve operating margins while at the same time extending our technology and product leadership positions.”

When questioned further on this in the analyst call, Mollenkopf implied he expects to lose Samsung business across the board, saying “So you should think of the current generation of flagship products at Samsung. We anticipate a similar share picture than what you see today on the GS6. I think that’s what we’re seeing. Now, next design cycle, as I mentioned in my remarks, I think we feel that we have a very competitive roadmap.”

This reads like an admission that the current generation of Snapdragons simply weren’t as good as what Samsung could make for itself. One reason for this could be any manufacturing advantage Samsung currently has over TSMC, which is the fab Qualcomm currently uses for its chip manufacture. These may include a process node advantage, which essentially allows more transistors to be crammed into the same sized chip.

There were rumours earlier this week that Qualcomm is considering switching from TSMC to Samsung for the manufacture of the next generation of Snapdragons, which would not only resolve that issue but presumably also ingratiate Qualcomm to Samsung in general.