×

Samsung unveils 'premium' chipset as smartphones struggle

Samsung unveiled its next-generation high-end chipset on Thursday, as it moves to differentiate itself and increase profits in the competitive smartphone market.

The new "premium" chip is a single square that will bring a "new level of performance" for mobile devices, according to Samsung. The product has got a tongue-twister name — Exynos 8 Octa 8890 — and will provide 30 percent more performance and 10 percent more power efficiency, according to the South Korean tech giant.


Samsung Exynos 8 Octa 8890
Samsung
Samsung Exynos 8 Octa 8890

"The Exynos 8 Octa is a leading-edge application processor for next-generation mobile devices that incorporates Samsung's mobile technology leadership in CPU (central processing unit), ISP (internet service provider), and modem as well as process technology," said Kyushik Hong, vice president of system LSI marketing at Samsung Electronics, in a statement on the company's website.

"With our custom designed CPU core and the industry's most advanced LTE (long-term evolution) modem, consumers using mobile devices with the Exynos 8 Octa will experience a new level of mobile computing."

While Apple has traditionally made its own chips for all iPhones, Samsung and Chinese rival, Huawei, have chopped and changed between using their own chips and using other providers. Samsung has previously steered clear of using its own chipsets in flagship mobiles sold internationally, so if it opts to use the Exynos 8 Octa in its Galaxy S6 next year, rather than Qualcomm, that could be a game changer.

Using its own chips in Samsung smartphones could help the company both differentiate its phones and grab a higher profit share from sales, Ian Fogg, head of mobile and telecoms at IHS Technology, told CNBC via telephone.


"The performance of this chip will be critical but not in isolation. The important thing will be to see how it performs against Qualcomm's Snapdragon 820 and the flagship MediaTek chipsets," Fogg said on Thursday.

"It's very hard to make a call on whether this chipset will be successful until we see all the competitive chip sets up and running… Very few people outside the handset makers have seen these chip sets actually performing," he later added.

Chips drove Samsung's profit in the third quarter of 2015. It posted operating profit of 7.39 trillion South Korean won ($6.36 billion), up 82 percent from 4.06 trillion won in the same period a year earlier. Operating profit in its semiconductor unit jumped by 62 percent, but mobile profitability declined.

Samsung bills itself as a "world leader in advanced semiconductor technology" and plans to begin mass production of the Exynos 8 Octa in late 2015.

Samsung's not the only Asian behemoth struggling in the smartphone space. Sony is flailing in a market dominated by Apple at the high end and newcomers like Xiaomi at the budget end.

Sony's mobile communications division posted an operating loss of 20.6 billion Japanese yen ($0.2 billion) in the third quarter, due to "a significant decrease in smartphone unit sales resulting from a strategic decision not to pursue scale in order to improve profitability." The unit also posted an operating loss in the second quarter.

— By CNBC's Katy Barnato. Follow her on Twitter @KatyBarnato.