When Apple officially announced its first MR head-display product, its "old rival" Samsung in the smartphone market was also revealed to be preparing to develop its own XR processing chip, and the related business strategy has begun to take shape, which means that Samsung will officially enter the XR chip market.
Driven by the metaverse, AI and other industries, XR has become one of the hottest emerging markets, and the XR chip market is full of unlimited opportunities but also full of challenges. Samsung, as the head player in the field of mobile phone chips in the past, what does it mean to bet on XR chips?
The XR chip track has attracted many competitors
For an industry, having dedicated components is often a sign of maturity. For an enterprise, in the face of fierce market competition, it is also an expedient to open up a new track with an even layout.
Perhaps in line with this principle, Samsung and the "old rival" Qualcomm have "rolled" all the way from the field of mobile phone chips to the field of XR chips.
In the period when XR chips did not have exclusive chips, XR devices could only "rub" mobile phone chips as processors. However, with the continuous development of XR devices, VR/AR and other devices need higher computing power support to avoid the dizziness problem caused by delay and poor display effect, so special chips are needed to solve the processing and transmission of massive data. This has allowed many mobile phone chip manufacturers to "smell" business opportunities.
Qualcomm, the "big brother" in the field of mobile phone chips, bore the brunt of the attack and entered the field of XR chips one step ahead. With the accumulation of technology in the field of mobile phone processors, in 2018, Qualcomm launched the industry's first chip platform XR1 dedicated to the XR field, and then launched the first XR chip XR2 that supports 5G. XR2 chips have been adopted by well-known companies in the XR field such as Pico, HTC, and Oculus, occupying half of the XR chip field.
Perhaps seeing the success of the Qualcomm Snapdragon XR2 chip, Samsung as another force in the field of mobile phone processors is also unyielding. Industry insiders revealed to reporters that the XR chip processor being developed by Samsung Electronics is transformed from its mobile phone processor Exynos series. Although the Exynos series processors have been somewhat "marginalized" in the field of mobile phones in recent years, Samsung's strength and determination in the chip field cannot be underestimated.
In the chip manufacturing process below 5nm, Samsung is one of the few manufacturers that still improves the chip manufacturing process step by step. In addition, Samsung has strong R&D capital and is willing to "throw money" at semiconductors. In 2022, Samsung's capital expenditure was KRW 53.1 trillion, of which KRW 47.9 trillion was spent on semiconductor business. In addition, Samsung is spending hundreds of billions of dollars to build the world's largest semiconductor manufacturing base in South Korea and is building a new factory in the United States.
Not only mobile phone chip manufacturers, non-traditional mobile phone chip manufacturers are also eager to deploy XR chips, in the future, Samsung's competitors in this field are likely to be far more than Qualcomm, a strong opponent.
Not long ago, Meta began to recruit the person in charge of XR's self-developed chip. Industry insiders said that although Meta previously announced that it would jointly create XR chips with Qualcomm, Meta still has a soft spot for self-developed XR chips. It is understood that Meta is committed to creating a complete and independent ecosystem, covering the underlying software and hardware such as operating systems and chips. In addition to being able to win more say in the industry, self-developed XR chips can also help teams optimize AR/VR devices in a more targeted manner.
In addition, there has been news recently that domestic manufacturers such as Guangzhou Semiconductor and Gravity are also trying to enter the field of XR self-developed chips.
"At present, the XR industry is in a stage where the demand is not clear. Although XR terminal devices and smartphones are related, they are two different products, and there are significant differences in user habits, business logic, content preferences, etc. between the two, so the market share and technical advantages of players in the field of smartphones are not obvious in the XR field. Therefore, mobile phone manufacturers and non-mobile phone manufacturers are basically on the same line in the XR field. Industry experts told the China Electronics News reporter.
Would XR chips be a good choice?
Why did Samsung choose to "bet" on XR chips?
Previously, the self-developed chips of major manufacturers often targeted traditional electronic products such as mobile phones and computers, and now the consumer electronics market is in a weak state. In terms of smartphones, data from Coners Consulting shows that the global smartphone market fell by 12% year-on-year in the first quarter of 2023, which is the fifth consecutive quarter of decline in the smartphone market. In computers, Canalys data for the first quarter of 2023 shows that total shipments of desktops and notebooks in the global PC market fell by 33%, marking the fourth consecutive quarter of double-digit declines. In this situation, Samsung and other mobile phone chip manufacturers looking for a "safe haven" to drive the chip business, which is a choice to stop loss and increase revenue.
For XR terminal devices, processor chips can be described as heart-like existence. Industry teardown data shows that processors account for 30% to 40% of AR/VR hardware costs. The disassembly of Pico 4 shows that the chip accounts for 31% of the combined cost of the hardware.
Source: WellsennXR
At the same time, the rapid development of industries such as metaverse and AI has promoted the surge in the XR terminal equipment market. Counterpoint Research predicts that shipments of XR devices will increase about sixfold to 110 million units by 2025, up from 18 million units in 2022.
In addition, XR as an emerging field, there are not many existing chip manufacturers, basically only Qualcomm's supply volume has begun to take shape.
As Apple clarifies its intention to enter XR, XR will have a broader market space and a stronger market development signal, whether it is for traditional mobile phone chip manufacturers such as Samsung or non-traditional mobile phone chip manufacturers such as Meta, XR chip field contains unlimited opportunities. As for whether Samsung can succeed in the field of XR chips, it depends on whether it can grasp the changing market demand of new technologies at any time in the future and build a differentiated competitive advantage in chip performance.
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Author丨Shen Cong Editor丨Zhu Lingzhenmei Editor丨Maria Executive Producer丨Lian Xiaodong