Samsung to Expand Production of 5G Modem Chips to Challenge Juggernaut Qualcomm

Samsung Electronics Vice Chairman Lee Jay-yong. (Photos: Samsung Electronics)

As 5G smartphones are enjoying more early popularity than expected, Samsung Electronics plans to expand the production of modem chips for 5G telcom communications and solutions used for those smartphones.

Samsung Electronics targets a 10 percent to 20 percent expansion. The move may be construed as Samsung’s strategy to surpass Qualcomm, a global leader in the global 5G telecom communications chip market at an earlier data.

A view of 5G total modem solution, produced by Samsung Electronics.

Early this year, Samsung Electronics Vice Chairman Lee Jay-yong unveiled a goal of making the electronics giant rise to the No. 1 position in non-memory sectors, such CPUs and mobile APs. Samsung Electronics has set one of the core mainstay products to achieve the goal as the nurturing of 5G telecom communication chips.

Korean electronics industry sources said Samsung is considering expanding the production of 5G modem chips, key parts of 5G smartphones.

Samsung Electronics’ System LSI Business Division design 5G modem chips, and they are produced by the company’s Foundry Business Division.

Only a few companies are capable of producing 5G modem chips. They include Qualcomm, Intel, Samsung Electronics and Hisilicon of China.

The market survey firm Strategy Analytics reported that Qualcomm is projected to produce 6.2 million 5G modem chips this year, followed by Samsung Electronics, which is forecast to produce 500,000 chips. Samsung’s upcoming production expansion will likely push the figure to surge. The value of the global 5G telecom communication chip market is predicted to jump from $161 million this year to $3.73 billion in 2021 and $7.968 billion in 2023.

Doh Hyun-woo, a researcher with NH Investment & Securities, said the popularity of 5G smarphones is most likely to rise not only in Korea and other countries in which 5G mobile telecom is introduced. A foreign media outlet reported that even though Samsung Electronics received an order request from Apples, but the former turned down it since it cannot meet demand. Samsung Electronics will reduce the gap with Qualcomm if the former secure capability to produce more 5G modem chips, he added.

Meanwhile, Samsung Electronics and LG Electronics are to release 5G smartphones in May to dominate the U.S. market ahead of Apples, which is not yet ready to follow suit soon. Samsung Electronics agreed to put on the U.S. market the Galaxy S10 5G via Verizon, the U.S. No. 1 telecom service provider, on May 16. Samsung Electronics and Verizon are to launch pre-sales of the Galaxy S10 5G on April 18.

Verizon succeeded in the commercialization of 5G telecom services through Motorola’s moto mode 5G, but it is evaluated to not be a full-fledged 5G smartphone since the LTE smartphone moto Z3 is outfitted with 5G telecom communication chips to enable 5G services.