Samsung's spending on smartphone chipsets is slowly rising, so much so that the South Korean company is now forced to compromise on the features of its overall Galaxy lineup. Samsung's costs have risen to nearly $7 billion this year, up more than 200% from the $2.3 billion paid in 2019, due to its heavy reliance on outside companies like Qualcomm and its Snapdragon chipset.
Developing cutting-edge smartphone chipsets on advanced manufacturing processes is an expensive endeavor, and according to statistics shared by Revegnus on X, Samsung is finding the hard way. Last year, Samsung had to pay $7.1 billion in smartphone chipset costs, and in 2023 it has already reached 69$4.3 billion, it's safe to assume that the company will pay about 10% this year, with an increase expected in 2024 as well.
Needless to say, these costs are unsustainable unless Samsung comes up with an effective solution that is to reduce its dependence on Qualcomm and use more of the Exynos family of in-house solutions. This increase in spending will also explain why Samsung continues to lag behind its competitors in terms of equipping its Galaxy S flagship line with impressive specs, especially when it comes to RAM.
According to previous rumors, the company is once again limiting the Galaxy S24 series to 12GB of RAM, while competitors are not only continuing to release products equipped with Snapdragon 8 Gen 3, but also with a lower *** and equipped with up to 24GB of RAM, with the latest entrant being the OnePlus 12. One could argue that Samsung drove more sales than other Android competitors, but the South Korean giant hasn't seen a significant increase in shipments compared to last year.
The situation is not expected to improve in the future either, with Qualcomm's Snapdragon 8 Gen 3 rumored to be more expensive than the Snapdragon 8 Gen 2, which is already painful pricing for Qualcomm's mobile phone partners, as it is valued at $160 for the entire package. In addition, with the Snapdragon 8 Gen 4 launching its custom Oryon core next year, Qualcomm has hinted that it will be more expensive than the Snapdragon 8 Gen 3, which will once again eat into Samsung's profit margins, albeit with improved chips.
The company needs to move forward with the development of its Exynos chipset, as putting its own SoC on par with its competitors will save Samsung billions of dollars. If the company can't get around this obstacle, it will continue to face this vicious cycle, and it may come that consumers may find less attractive in future Galaxy S devices, which will reduce its brand value.