Samsung’s Strategic Disconnect: How Its Reliance on Qualcomm and TSMC Undermines Its Own Chip Ambitions

As the global tech landscape becomes increasingly defined by vertical integration, semiconductor self-sufficiency, and geopolitical competition, Samsung Electronics finds itself caught in a paradox of its own making. On the surface, its Galaxy S smartphones are among the most respected Android flagships in the world. Yet behind the scenes, the very strategy that powers these devices is weakening Samsung’s long-term competitiveness in the semiconductor arms race.

The core issue? Samsung is pouring billions into Qualcomm’s Snapdragon chips—manufactured by rival foundry TSMC—at the expense of its own Exynos chip division and in-house semiconductor foundry. This seemingly pragmatic decision to prioritize Galaxy S product quality over internal integration reveals a deeper, systemic misalignment within Samsung’s sprawling conglomerate structure.

Samsung’s flagship Galaxy S and Galaxy Z series are increasingly powered by Qualcomm’s Snapdragon system-on-chips (SoCs). In fact, for several recent generations, Samsung has either limited or entirely excluded its own Exynos SoCs from many key markets, including the U.S., Europe, and parts of Asia. Qualcomm’s chips are indisputably world-class, but what’s often overlooked is that they’re manufactured by TSMC—Samsung’s direct competitor in semiconductor fabrication. In opting for Snapdragon, Samsung not only outsources a key component of its product identity, but also helps fuel the scale and yield improvement of TSMC’s most advanced process nodes (such as N4P and N3E). In doing so, Samsung inadvertently accelerates TSMC’s lead in leading-edge fabrication, an area where Samsung has been struggling to close the gap.

The fallout is circular and self-perpetuating: Samsung Mobile’s decision to avoid Exynos chips means Samsung Foundry loses critical internal volume that could be used to optimize yield, improve performance-per-watt, and reduce costs through scale. This loss of volume makes Samsung’s fab less competitive than TSMC, which in turn reinforces the decision by Samsung Mobile to keep choosing Snapdragon. Meanwhile, Samsung’s chip design division (System LSI) is boxed into using its in-house foundry—even when the fab’s maturity lags behind TSMC’s. It’s a textbook case of internal misalignment. Samsung’s mobile business is allowed to freely source the best SoC available. But its chip design business is not allowed the same freedom to use the best fab. This imbalance undermines both the competitiveness of Exynos and the efficiency of Samsung’s foundry division.

The situation grows more strategically troubling when viewed through the lens of brand equity. Samsung co-brands its premium smartphones with Qualcomm under the “Snapdragon for Galaxy” initiative. In doing so, Samsung is not only marketing its smartphones—it is also elevating Qualcomm’s brand as synonymous with premium Android performance. This co-branding transfers prestige and consumer trust from Samsung’s hardware to Qualcomm’s silicon. That brand equity, in turn, is weaponized by Qualcomm when it sells the same Snapdragon chips to Chinese OEMs such as Xiaomi, Oppo, and Vivo—all of whom aggressively compete with Samsung in key markets outside China. Put bluntly, Samsung is funding its own competitors—both directly through chip purchases and indirectly through brand endorsement.

What we see is a fractured strategy within Samsung’s own ecosystem. Samsung Mobile (MX) acts like a standalone OEM competing against Apple and Chinese players. Meanwhile, Samsung LSI and Samsung Foundry—two critical pillars of semiconductor vertical integration—are deprived of internal volume and the flexibility to pursue best-in-class manufacturing partnerships. In contrast, Apple’s strategy is tightly integrated: it designs its own chips (A-series), exclusively manufactures them through TSMC, and reaps the benefits of ecosystem control and branding consistency. Samsung, by comparison, is increasingly reliant on outside vendors to supply its most strategic components.

To regain competitive footing and preserve its long-term technological sovereignty, Samsung must take a hard look at its internal alignment and global chip strategy. Several options are worth serious consideration:

As global supply chains tighten and U.S.-China tech competition intensifies, the value of owning the semiconductor stack—from design to fabrication—is only increasing. Samsung has all the pieces to be a vertically integrated powerhouse, but those pieces are currently working at cross-purposes. If Samsung fails to resolve this internal disconnect, it risks not only ceding ground to Apple and TSMC but also continuing to fund the very players (Qualcomm and Chinese OEMs) who are encroaching on its turf. What’s needed now is not just strong chips or better fabs—but better alignment. Without it, Samsung may continue to win individual battles, but lose the long war for semiconductor leadership.