More powerful chips cost more money—and competition is hot on their heels.
According to a report on Weibo, chip maker Qualcomm seems to have continuously raised the prices of its smartphone chipsets in recent years. The current top chip Snapdragon 8 Gen 3 is said to be a full $40 more expensive than its $200 per unit predecessor.
For Qualcomm, the price increase is certainly justified, as the integration of new manufacturing processes and increasingly sophisticated AI functions results in higher research and development costs. At least the latest chip seems to be worth the money, as benchmarks and comparisons with other options underline. But a point may be reached where Android smartphone manufacturers no longer want or can’t afford the rising costs.
For new top smartphones: the new Qualcomm Snapdragon 8 Gen 3 is sometimes twice as fast
Companies are then faced with the choice of raising end-customer prices of their devices, accepting lower margins or switching to alternative chip suppliers – primarily MediaTek. Its Dimension 9000 chip series has caught up significantly in recent years and is now almost on par with Qualcomm.
Based on that Current Quarterly Report Qualcomm was able to increase sales by 5 percent to $9.94 billion in the first quarter of 2024. Profit rose 24 percent to $2.7 billion. Growth was primarily driven by chips for smartphones and cars.
Still, Qualcomm’s dominance appears to be coming to an end, especially in the crucial Chinese Android market. The company expects chip sales in China to stagnate in the current quarter. Qualcomm is increasingly at risk of losing market share to competitors such as MediaTek.
If the leaked Snapdragon 8 Gen 3 prices are confirmed, it could mark a turning point where Qualcomm’s dominance in the Android market is coming to an end. However, these estimates are still based on a thin layer of rumours, as exact prices are not publicly known and may vary depending on the buyer.
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