Anyone who has been reading my analysis here, and other places, know I’ve been relatively bearish on Qualcomm. The primary reason was that of the trend by premium smartphone companies to go more vertical and make their chips. Samsung does this, even though they still use Qualcomm technology in some of their products. Huawei similarly is moving to integrate more of their HiSilicon chipsets into their devices. Even Google has made some moves and could potentially develop some of their silicon solutions.
What was worrying about this trend was how Qualcomm seemed to be in a spot to lose share of their chips in the premium segment. The king of premium, Apple, already does not use Qualcomm’s premium Snapdragon processors, and the second biggest premium vendor in Samsung, similarly uses their chipsets in their most expensive smartphones. The number of customers willing to charge for Qualcomm’s premium innovations seemed to be shrinking. Which, I reasoned, would make it harder for Qualcomm to keep investing the kind of money they need to remain competitive with a premium chipset option. With Qualcomm’s newest 855 mobile platform, I think their fortunes in the premium market is about to change.
One single observation, I think, underscores the change in my thinking. It stems from the Snapdragon 855 is more than just a slight upgrade from the Snapdragon 845. The 855 is shaping up to be a significant leap forward in capabilities. It may be the best, or at least one of the best, designed systems Qualcomm has ever made. What interests me most about the new 855 is how the most interesting thing is not the more advanced CPU or GPU but their Hexagon digital signal processor and a new, first of its kind, computer vision signal processor that opens up new possibilities and features around computer vision and computational photography.
The key observation I want to make is this: Huawei’s best and Samsung’s best premium chipsets are not competitive with the SnapDragon 855. At first, that may not seem to matter, but when you consider what Qualcomm’s dedicated partners are doing it gets more interesting. In the case of Qualcomm, they want to charge north of $800 for premium Galaxy smartphones. But, when the capabilities of their $800, or higher, using their own Exynos processor is not as capable in performance or features as a $500 OnePlus or Xiaomi smartphone (both companies who will go big with the 855) then why would someone choose a premium Samsung or even premium Huawei device? A $400-$600 smartphones running the 855 will outperform the premium by Samsung, and thus by nature of the competition, I’m not sure Samsung can keep pace with Qualcomm in premium chipset design. Their process technology fab may also be starting to show their inability to compete, which would be another detriment to Samsung’s chipset strategy but that is for a different analysis.
In both Samsung and Huawei’s case, and this may be a signal to other smartphone brands looking to do their processors (except for Apple) their proprietary chipset strategy may end up being a detriment instead of the competitive advantage they once thought.
Now, the companies mentioned above can certainly remain either stubborn or bullish in their abilities to design silicon for premium smartphone experiences, however, with the launch of the Snapdragon 855, I believe that could end up being extremely risky should they double down.
With smartphone brands like OnePlus and Xiaomi starting to gain some traction, the entire notion of premium experiences in Android is changing. A lot of that has to do with both brands commitment to Qualcomm and their commitment to using Qualcomm’s premium innovations in smartphones in the $400-$600 price band.
While what I’m laying out is simply one of many potential scenarios, my gut is I’m right, and Qualcomm may end up seeing Samsung and Huawei start to swing back in their direction. If so, the narrative that Qualcomm has lost share in premium could turn around, and they could end up gaining share in the premium Android smartphone market. Truly an interesting set of events, but it seems unanimous amongst industry watchers, and even the most technical of semiconductor analysts in my circle, that the Snapdragon 855 is a beast of a chip and will enable some extremely interesting features that Qualcomm partners can take advantage of and differentiate in the market.
Lastly, Qualcomm seemed to hint on stage that they are pretty confident the 855 will benchmark competitively against Apple’s A12. That, I’m going to have to see to believe, but I appreciate their confidence.
