The new Samsung smartphones, the Galaxy S6 and S6 Edge are the most expensive to produce flagships that the Korean manufacturer has ever produced.
There are around 110 components that are used in the Galaxy S6 compared to 80 used in its predecessor, the Galaxy S5.
Apart from this the Galaxy S6 and S6 Edge have a premium metal and glass chassis that is very expensive to develop that the plastic body of the previous Galaxy smartphone.
Well the good part is that Samsung is able to produce many of the components itself and one of the ways to reduce the overall bill of materials for the Galaxy S6 and S6 Edge was to use the Exynos system chip.
This chip has been developed by Samsung itself. This has helped the Korean manufacturer to save upon silicon price and on patent royalties that Qualcomm collects.
Samsung alone has paid Qualcomm more than $9 billion in royalties since the inception of the Galaxy S lineup. So it is the Snapdragon chip that is the major part of Qualcomm’s revenue.
So the launch of the Galaxy S6 and S6 Edge along with Samsung’s own application processor has put Qualcomm in a bad financial position.
That is why Qualcomm is now considering to lower the patent royalties it demands from phone makers especially Samsung which is the world’s largest cell phone maker.
Plus many of the industry’s insiders have stated that Qualcomm might separate its chipset making unit altogether.
This is because the company cannot compete with a silicon powerhouse like Samsung with its superior manufacturing processes. So the company will now be concentrating more on the licensing and royalties business.
