Smartphone Manufacturers Compete To Make Their Own Chips, What Are The Benefits?

JAKARTA - Lately, many smartphone manufacturers have chosen to produce their own chipsets. But it turns out, this step can have a good and bad impact for each manufacturer.

Oppo, for example, recently stated that it will soon make its own System on Chip (SoC). The company aims not to rely on chipmakers like Qualcomm and MediaTek. The plan is that the new SoC will be embedded in the company's flagship series phones in 2023 or 2024.

A principal analyst at Isaiah Research, Erick Tseng said the race for smartphone manufacturers to use their own processors has certain risks. Chances are, the chip will not perform as reliably as standard offerings from suppliers who have been in the industry for a long time.

"That's why we don't see many players dare to use their own mobile processors, and why most of them start developing image signal processing chips first," said Tseng, as quoted by Nikkei Asia, Saturday, October 23.

However, for most smartphone makers, having their own phone processor brings two benefits. Counterpoint analyst Brady Wang cited two main benefits of making your own chips: differentiation and better supply chain control.

"If everyone uses Qualcomm chipsets for flagship phones, then it's very difficult to claim that you have unique performance and product. Meanwhile, you have to compete for chip and resource allocation with your competitors during times of shortage, and have no direct visibility from your chip supply chain," said Wang.

Wang added that he also sees some internal chip-making efforts have paid off, such as Apple, Huawei and Samsung.

However, it doesn't always go smoothly, there are still obstacles and there needs to be ongoing efforts from the smartphone manufacturing team that makes their own chipsets. "We still haven't seen a very successful case following Apple, Huawei and Samsung," said Wang.

Finally, Wang hopes that mobile phone manufacturers who make their own chips can overcome problems such as complex system integration, and costs that also increase as chip-making technology advances.