SEOUL (Reuters) - Samsung Electronics Co Ltd (KS:005930) will not use Qualcomm Inc's (O:QCOM) processors for the next version of the South Korean technology giant's flagship Galaxy S smartphone, Bloomberg reported on Wednesday, citing unidentified sources.
Such an outcome would be a blow for Qualcomm's prospects for 2015, with the company already having guided for weaker-than-usual annual revenue growth in a five-year outlook issued in November. Samsung, the world's No.1 smartphone maker, has been one of the U.S. company's top customers.
Qualcomm's new Snapdragon 810 chip overheated during Samsung's testing, Bloomberg reported. The South Korean company will use its own processors instead, Bloomberg said.
A Qualcomm spokesman declined to comment on the report. A Samsung spokeswoman said the company does not comment on rumours.
Analysts have said the Snapdragon 810 chip has been dealing with a variety of performance issues that may not be corrected in time for the launch of Samsung's next Galaxy S smartphone.
The South Korean firm is widely expected to unveil the device on the sidelines of the Mobile World Congress trade show in early March. Samsung will need to ensure that the phone does not disappoint in order to keep its global market share from slipping further, analysts said.
Samsung has already used its own Exynos processors in flagship devices such as the Galaxy S5 to some extent, though analysts said Qualcomm's Snapdragon chips were more widely used. Greater adoption of Exynos chips in Samsung smartphones would help boost sales for the struggling foundry business.
"Samsung will likely show off the new Galaxy S phone in about a month and a half, so one would have to assume that the chips have been tested a fair amount in order for them to be used," said HMC Investment analyst Greg Roh.
Successful deployment of Exynos chips in flagship Samsung smartphones will help burnish the company's credentials as a chip designer and manufacturer, Roh said. This could help its foundry business attract more orders from the likes of Apple Inc (O:AAPL), he said.