The semiconductor manufacturing division of Samsung Electronics has won a deal to make new Qualcomm 5G chips, Reuters reported.
Samsung will fabricate at least some of Qualcomm’s X60 modem chips, which will connect devices such as smartphones to 5G networks. The X60 will be made on Samsung’s 5-nanometer process, which makes the chips smaller and more power-efficient than previous generations.
TSMC is also expected to fabricate 5-nanometer modems for Qualcomm. Samsung is the world’s second-biggest chip manufacturer through its foundry division, self-supplying many of its own mobile phone parts and also fabricating chips for outside customers such as IBM and Nvidia, among others.
Much of Samsung’s semiconductor revenue has come from memory chips, whose prices can swing as supply and demand fluctuate. Samsung announced a plan last year to invest $116 billion in non-memory chips through 2030.
Samsung has won only part of the orders. But Qualcomm represents a flagship customer for Samsung’s 5-nanometer manufacturing technology. Samsung plans to ramp up that technology this year to regain market share against TSMC, which is also starting mass production of 5-nanonmeter chips this year.
The Qualcomm win could boost Samsung’s foundry business because the X60 modem is likely to be used in many mobile devices as they shift to 5G. In the fourth quarter of 2019, Samsung had 17.8 percent market share versus TSMC’s 52.7 percent, according to data from TrendForce.
In a separate announcement, Qualcomm said on Tuesday it would begin sending samples of the X60 chips to customers in the first quarter of this year. Qualcomm did not disclose who would manufacture the chips. Reuters could not learn whether the first batches of chips would be made by Samsung or TSMC.
The Taiwanese company was faster to ramp up high-volume production of chips using the previous 7-nanometer manufacturing process, winning customers such as Apple.
Last month, TSMC executives said they expect to begin ramping up 5-nanometer production in the first half of the year and expect it to make up 10 percent of the company’s revenue for 2020.
Qualcomm is the world’s biggest supplier of mobile phone chips. The San Diego, California-based company said its new X60 modem chip, along with a new antenna chip, will be the first to aggregate signals sent over the disparate frequencies used in the two variants of 5G networks, a feature the company said will help boost download speeds.
Qualcomm has said it believes between 175 million and 225 million 5G smart phones will be sold in 2020.
Qualcomm’s modem chips can handle both sub-6 frequencies and millimeter wave frequencies.