### Samsung Exynos Crisis: The Impact of ARM’s Price Increase and In-House AP Development

ARM’s increase in technology fees and the news of its own application processor (AP) development pose a significant challenge to Samsung Electronics’ AP business. Let’s examine this matter by group below.

1. Background and Intent of ARM’s Price Hike

• Qualcomm Lawsuit Loss and Weakening Market Influence
  • ARM had to revise its licensing business direction after losing a lawsuit against Qualcomm. In this process, it is pushing for a plan to increase license fees by up to four times to further enhance its profitability.
  • ARM plans to strengthen its financial base in the market and raise technology revenue to about $1 billion over the next 10 years.
• The Core of the ‘Picasso Project’
  • The ‘Picasso Project,’ which appears to be ARM’s internal strategic project, is an initiative to maximize revenue through increased technology fees and in-house AP development.

2. Impact on Samsung Exynos

• Weakened Exynos Competitiveness
  • Samsung’s ‘Exynos’ has heavily relied on ARM’s technology in AP design. The fee hike is likely to significantly increase production costs, which raises concerns about weakening Exynos’ competitiveness.
  • Currently, Exynos is being excluded from the Galaxy S25, and Qualcomm’s Snapdragon is planned to be fully equipped. This is a red flag for the long-term sustainability of the Exynos business.
• Hit to Samsung MX Division’s Performance
  • The increase in AP technology fees may result in higher costs for mobile devices. This could negatively affect Samsung’s MX (Mobile eXperience) division.
• Lack of Alternative Technology
• The ARM architecture holds a dominant position with over 90% market share in the AP design market. In a situation where there is virtually no alternative technology, cooperation with ARM is virtually essential.

3. Importance of Negotiations Between Chairman Lee Jae-yong and Chairman Masayoshi Son

• Necessity of Cooperation
  • Samsung Electronics Chairman Lee Jae-yong is expected to cooperate with SoftBank Chairman Masayoshi Son for ARM license fee negotiations.
  • Attention is drawn to whether they can derive conditions favorable to Samsung based on their close relationship, especially major networks such as the ‘Sun Valley Conference’.
• Possibility of ARM Foundry Cooperation
  • Samsung Electronics’ foundry division is experiencing difficulties in securing customers in the 3-nanometer or below ultra-fine process. If ARM develops its own AP chip and uses Samsung Foundry, it could be a win-win situation for both parties.
• Expanding Cooperation in AI, IoT, and Autonomous Driving Fields
• ARM’s technology is essential in new growth fields such as artificial intelligence, the Internet of Things, and autonomous driving. Samsung is likely to increase its strategic investment in ARM and expand its cooperation areas to automotive semiconductors and AI computing chips.

4. Threats and Opportunities from ARM’s In-House AP Development

• Threat Factors
  • If ARM develops its own AP and sells it to major companies, the cost of using ARM technology, which Samsung has relied on, could increase.
  • As Exynos directly competes with ARM’s competing products, its market position may also weaken.
• Opportunities for Samsung Foundry
  • If ARM’s in-house AP development project entrusts production to Samsung Electronics’ foundry, Samsung can use this as a new source of revenue.

5. Future Strategy Implications

• Need for Strategic Investment
  • Samsung Electronics has secured approximately 103 trillion won in investment capacity. Securing a long-term technology ecosystem through cooperation with ARM is essential.
• Need for Alternative Technology Development
  • There is a need for a medium-to-long-term plan to reduce reliance on ARM architecture and develop its own chip design capabilities.
• Multifaceted Approach
• While improving relations with ARM and increasing negotiating power for license fee increases, alternative measures that can reduce reliance on ARM must be developed in parallel.

This complex situation between ARM and Samsung goes beyond simple cost issues and will have a major impact on Samsung Electronics’ technology strategy and market position. Depending on Samsung’s response direction, the future of Exynos, and even Samsung’s status in the entire semiconductor market, may change. This is a strategically important moment of choice.

*Source URL:
https://www.businesspost.co.kr/BP?command=article_view&num=380599