During an Unpacked event, Samsung (NASDAQOTH:SSNLF) introduced its next generation Galaxy S6 and Galaxy S6 smartphones. As expected, these phones came powered by Samsung-designed Exynos processors, and it appears that no variant of the device will feature Qualcomm's (NASDAQ:QCOM) Snapdragon 810 processor.
With Qualcomm seemingly completely out of the applications processor spot in the Galaxy S6, it's worth asking whether Qualcomm is completely out of the Galaxy S6. In other words, will Qualcomm supply a stand-alone cellular modem to the S6?
I'd imagine that the answer is a conditional "yes"
In order to work properly on Verizon (NYSE:VZ) and Sprint (NYSE:S) networks in the United States, smartphones still need to support CDMA technology. To my knowledge, Samsung's own Exynos modems, like Intel's (NASDAQ:INTC) XMM 7260 modems, don't have CDMA support. Qualcomm's MDM9x35 cellular modem, on the other hand, does.
So my bet is that for Galaxy S6 models that sell in the United States, Samsung is very likely to pair its 14-nanometer Exynos 7420 processor with a Qualcomm MDM9x35 baseband. According to AnandTech, all of the Galaxy S6 models will support category 6 LTE-Advanced, so it's too early for the category 10 capable MDM9x45.
What about other regions, though?
The situation gets a little bit trickier when it comes to trying to guess what modems Samsung is using in other regions. With the Galaxy Note 4, Samsung used a mixture of Qualcomm's MDM9x36, Samsung's own Exynos modem 303, and the Intel XMM 7260, depending on the region. I suspect that Samsung will do the same with the Galaxy S6.
This suggests, then, that Qualcomm is likely to recognize revenue from the S6, but it's going to be significantly reduced from what it was able to recognize from prior generations of Galaxy phones.
Is Qualcomm out of Samsung for good?
While Qualcomm seems to be "out" of the Galaxy S6, I don't think that Qualcomm is out of future Galaxy phones. Some have speculated that Samsung will use next generation Qualcomm Snapdragon chips once those chips are built in Samsung's factories rather than at Taiwan Semiconductor (NYSE:TSM).
This seems like a reasonable way for Samsung to get ahold of extremely well designed Qualcomm chips, while at the same time guaranteeing volumes for its factories (and denying competitor Taiwan Semiconductor those volumes).
Others have suggested that once Qualcomm moves back to its own internally developed CPU architecture, rather than licensed ARM (NASDAQ:ARMH) cores as seen in the Snapdragon 810, Samsung might find the Qualcomm solutions attractive again. This, too, seems plausible.
At the same time, though, it's hard to ignore that Samsung could likely see significant cost savings by using its own Exynos chips and internally designed modems rather than using third party solutions, even if said third party solutions are built in Samsung's factories. I think that if Qualcomm is able to build "better" chips than Samsung can, then Qualcomm can get back into flagship Samsung phones, but if Samsung's chip teams put out competitive chips, then Samsung may not be so eager to use Qualcomm's chips.
What I believe will be very interesting to watch is what applications processor and modem solution(s) Samsung uses for the Galaxy Note 5, which will presumably launch this fall. If it's all-Samsung again, then perhaps Qualcomm might be substantially out of Samsung's flagships. If Samsung goes back to using both Exynos and a Qualcomm Snapdragon, then that might suggest that Qualcomm's ouster from the S6 was a one-time deal.