Samsung Lands Qualcomm Snapdragon 820 Chipset Manufacturing Deal

Samsung reportedly has landed a deal to manufacture Qualcomm’s (QCOM) next generation Snapdragon 820 mobile processor, beating out Taiwan Semiconductor Manufacturing Co. (TSMC) and other foundries for the business, according to Re/code’s sources.

The Korean conglomerate’s advantage over TSMC apparently is its 14-nanometer technology, the report said. The process enables Samsung to cram more processing power into a smaller area while eating up less power. Samsung claims chips produced from its 14-nanometer process use 35 percent less power, boast 20 percent more processing power and occupy 15 percent less space. In other words, there’s more bang for the buck.

Qualcomm is aiming its Snapdragon 820 processor at 2016’s top-of-the-market smartphone models and reportedly is hoping its switch from TSMC to Samsung’s chip manufacturing facilities will help it to win back the device maker’s Galaxy S business it lost with the most recent Galaxy S6 handsets. Samsung elected to use its own Exynos chips in the Galaxy S6 rather than Qualcomm’s Snapdragon 810.

The Snapdragon 820 will include a built-in LTE modem and a custom-designed Qualcomm processor and graphics core, design features that could entice Samsung to swap out its own Exynos chip for Qualcomm’s, especially since it had to use a separate modem chip in the Galaxy S6.

Winning the Snapdragon 820 business from Qualcomm is a second major victory for Samsung’s chip making operation and a second piece of bad news for TSMC. Apple is said to have turned to Samsung to make the A9 chip to power its next iPhones, favoring, as did Qualcomm, Samsung’s 14 nanometer technology.

Samsung plans to invest nearly $15 billion to construct a new chip manufacturing plant in South Korea, more than it has invested in any single year of the past five. That plant is expected to be operational by 2017. The company also has a deal in place with GlobalFoundries to bring its 14-nanometer process to its plant in update New York.