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Strategic Importance of Exynos in Samsung’s System LSI

ByDr. K
The ongoing debate about shifting the Exynos AP development from Samsung’s DS (Device Solutions) division to the MX (Mobile Experience) division overlooks several critical aspects that define the strategic importance and intrinsic value of Samsung’s System LSI business. Below, I elaborate on three core reasons why maintaining the Exynos development within the System LSI division is strategically essential.

1. Strategic Negotiation Power with Qualcomm
Samsung’s MX division spends more than 10 trillion won (approximately $10 billion) annually purchasing Application Processors (AP) from Qualcomm. Without Exynos, Samsung would inevitably lose significant bargaining leverage against Qualcomm, making it difficult to negotiate favorable pricing.
Currently, Samsung effectively uses its Exynos chipsets as a bargaining tool in negotiations with Qualcomm, restraining price increases and maintaining competitive procurement costs. Qualcomm remains aware that Samsung could deploy Exynos APs in its flagship smartphones, compelling it to offer better pricing terms.
This strategic leverage is most effective when maintained within an independent, semiconductor-focused division such as System LSI. Moving Exynos development to the MX division could significantly diminish the neutrality, objectivity, and strategic effectiveness of this critical negotiation tool.

2. Validation Platform for Samsung Foundry’s Advanced Process Technology
Samsung Foundry is fiercely competing with TSMC in ultra-fine process nodes of 3nm and below. Establishing credibility in cutting-edge foundry processes requires reliable verification and validation using actual silicon implementations, and Exynos, developed by System LSI, consistently plays this pivotal role.
The Exynos chipsets are often among the first to adopt Samsung’s latest semiconductor manufacturing processes, serving as essential references for Qualcomm, AMD, NVIDIA, and other major customers. These companies closely observe the yield, reliability, and performance results demonstrated by Exynos to assess whether Samsung’s foundry processes are mature and competitive enough to warrant their business.
If Exynos development shifts to the MX division, the primary goal of process validation risks being overshadowed by short-term smartphone performance goals. This could undermine the critical role of Exynos in validating advanced foundry technologies and negatively impact Samsung Foundry’s competitive edge.

3. Core Foundation of Comprehensive System Semiconductor Portfolio
Samsung’s System LSI division possesses a diverse range of semiconductor products and intellectual property (IP), including not only APs but also Image Signal Processors (ISPs), modem chips, Display Driver ICs (DDI), Power Management ICs (PMIC), and various sensors. These semiconductor solutions are utilized across multiple sectors, including automotive, IoT, AI, and wearables, and represent crucial long-term revenue sources and growth drivers.
Within this broad portfolio, Exynos AP is the flagship product that embodies and showcases Samsung’s comprehensive system semiconductor capabilities. Moving Exynos to the MX division could overly constrain the scope of chipset development, limiting the ability to diversify and innovate across multiple industries and markets, ultimately weakening Samsung’s entire semiconductor ecosystem.
Maintaining Exynos development within System LSI thus supports the long-term strategic objective of fostering and expanding a comprehensive semiconductor portfolio, beyond just smartphones.

Conclusion
Considering these three strategic dimensions—negotiation power with Qualcomm, validation of cutting-edge foundry technologies, and maintenance of a diversified system semiconductor portfolio—it becomes clear that transferring Exynos development to the MX division would be a short-sighted decision. Retaining Exynos development within Samsung’s System LSI division aligns better with Samsung’s broader semiconductor ambitions and would ensure sustained competitiveness in the global semiconductor market.

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