Qualcomm Brand Shot CES 2014

By now, you’ve likely heard that Qualcomm is having issues producing its latest high-end processor, the Snapdragon 810. That’s not uncommon in an industry where products are literally measured in microns. Only problem is, a lot of smartphone makers depend on Qualcomm for their application processors, meaning that the heat is on, literally and figuratively, for the chipmaker to figure out a solution.

Last week we heard that Samsung is going to drop Qualcomm’s Snapdragon 810 chip from the Galaxy S6, and replace it with an Exynos chip of its own production. That would be a huge blow for Qualcomm, given that Samsung is one of its biggest clients, and the Galaxy S series is Samsung’s bestselling device.

WSJ later reported that, in a bid to get Samsung to use Snapdragon 810 at least for some of its Galaxy S6 production, Qualcomm is scrambling to modify the chip, with a “fixed” version to be presented to Samsung in March.

Last minute changes are relatively common in chip manufacturing, as an analyst cited by Korea Times points out:

“In this sense, there is a chance Qualcomm will provide a modified version for Samsung to use in the Galaxy S6 model, but this is usual before massive production. For Qualcomm, Samsung Electronics is one of the most important partners, so the company is likely to show some reaction to the issue.”

However, if Qualcomm admits that it modified a design for Samsung, it could get in hot water with other clients. LG and Xiaomi are the two companies that have announced Snapdragon 810-powered devices, the G Flex 2 and Mi Note Pro, respectively.

Citing a source close to the matter, Korea Times reports that LG may even be tempted to call out Qualcomm over the issue:

“If Qualcomm officially confirms it will modify the Snapdragon 810, it means that the company admits the chipset has a flaw. Then it could trigger legal disputes.”

To be clear, that doesn’t mean that LG will necessarily sue Qualcomm over the Snapdragon 810. It’s just that, depending on the agreements between the two companies, LG could claim that Qualcomm has not kept its end of the bargain.

LG has already denied that the G Flex 2 (not the Snapdragon inside) suffers from overheating, though this wording leaves room to interpretation.

While irritating LG is just a possibility for now, another side effect of this debacle could give Qualcomm some real headaches – the resurgence of Exynos chips. For the last few years, Qualcomm has copiously dominated the mobile SoC industry. While Samsung, Nvidia, and Intel managed to get their chips into some devices, Qualcomm owned most of the market, especially at the mid and high-end. MediaTek, focusing on entry-level devices, has been the only real competition.

This faux pas could give Samsung the chance to sell the upcoming Exynos 7420 as a real alternative to Snapdragon 810, at a time when the company is looking for ways to keep profits in-house. Not only would Qualcomm lose major orders from Samsung, other clients may be tempted to use Exynos chips in their devices.