The chip war at 3nm is reigniting, will Qualcomm take the top spot in the mobile market?

Last year, Qualcomm released a "heavyweight bomb" into the high-end market - the Snapdragon 8 Gen3 mobile platform, with TSMC's 4nm process and industry-leading platform integration capabilities, making it one of the most anticipated terminal chips in the Android high-end smartphone market.

Looking back at 2023, almost all flagship models of Android phone brands chose to use the Snapdragon 8 Gen3 mobile platform. The Xiaomi 14 series, Honor Magic6 series, iQOO 12 series, and OPPO Find X7 Ultra all received a warm welcome from consumers due to their outstanding performance and impressive hardware.

Although the market share of high-end models is not high, it is highly valued by mobile phone manufacturers. In addition to "showing off muscles," brands pay more attention to the market potential of high-end phones. According to the IDC report, the market share of high-end smartphones priced above $600 in China reached 27.4% in 2023, a year-on-year increase of 3.7%. This means that there is still a very large competitive space for high-end models.

Don McGuire, Senior Vice President and Chief Marketing Officer of Qualcomm, announced at MWC 2024 that Qualcomm plans to release the Snapdragon 8 Gen4 mobile platform in October this year. The key point is that the Snapdragon 8 Gen4 will be the first mobile chip under Qualcomm to adopt TSMC's 3nm process, which also means that the Android camp is officially entering the 3nm era. This chip is expected to become the preferred chip for high-end models in the second half of 2024, and will be sought after by manufacturers.

Android phones enter the 3nm era

Last year, Apple was the first to use the 3nm process and launched the world's first 3nm mobile chip, the A17 Pro, which debuted on the iPhone 15 Pro and iPhone 15 Pro Max. According to TSMC's 3nm process plan, it includes at least five processes, namely N3B, N3E, N3P, N3S, and N3X. The A17 Pro uses the N3B process, and the upcoming Snapdragon 8 Gen4 is expected to use the N3E process.

The improvement of the Snapdragon 8 Gen4 mobile platform mainly focuses on two aspects: process and architecture.

In terms of process, the Snapdragon 8 Gen4 uses TSMC's 3nm process, which can bring higher frequency and lower power consumption compared to the previous 5nm process, which is crucial for the speed and battery life of the phone.

In terms of architecture, the Snapdragon 8 Gen4 uses an eight-core design consisting of two performance cores and six efficiency cores. The CPU design adopts the 2 Phoenix L+6 Phoenix M architecture, marking Qualcomm's departure from the ARM public architecture and embracing the self-developed CPU Nuvia architecture. The new dual-cluster eight-core CPU architecture indicates that the Snapdragon 8 Gen4 will have impressive performance.

According to the digital blogger Digital Chat Station, internal test results of the Snapdragon 8 Gen4 show that the frequency range of its large core is between 3.6GHz and 4.0GHz. In the Geekbench 6 (GB6) benchmark test, the processor's score is expected to fluctuate within the range of 2.7K±/10K±, indicating a significant improvement in the theoretical performance of the Snapdragon 8 Gen4 in terms of CPU and GPU compared to the previous flagship processor.

It is understood that although the performance of the Snapdragon 8 Gen4 is powerful, due to the high frequency setting, the power consumption performance is average, and it is expected to be downclocked during mass production.

Positioned as a flagship Snapdragon 8 Gen4, it has played an important role in the era of 3nm for Android phones, not only catching up with Apple's phones in terms of process progress, but more importantly, the progress of Android phones in the high-end phone field in terms of performance and power consumption will be further enhanced, enhancing its cutting-edge competitiveness.

Due to the higher production cost of the new process chip and the initial production capacity ramp-up period, the 3nm process will probably only be used on the Snapdragon 8 Gen4 mobile platform in the short term.

Samsung and TSMC are in a battle for 3nm smartphone chips.

In the current era of "excessive performance" in smartphones, most users may not even need all the performance of the latest flagship chips. Compared to users, the progress of chip processes is more critical for foundries, directly affecting their income.

From 7nm to 5nm, and now to 3nm, the gradually decreasing numbers represent the continuous improvement of smartphone product performance. The technological difficulty and R&D cost will mostly keep most chip foundries from impacting the high-end market, with only a few players still having the capacity to strive for higher peaks, with TSMC and Samsung being representatives.

It is well known that Apple is TSMC's largest customer, bringing in about 25% of its overall revenue each year. The Apple A17 Pro chip debuted TSMC's N3 process, ushering the industry into the era of 3nm. Compared to the A16 chip using the 4nm process, it brought a 35% power consumption improvement. Perhaps it is the advantage brought by 3nm that made the iPhone the global shipment champion last year, naturally bringing significant gains to TSMC, further consolidating its position in the foundry industry.

Looking at Samsung, the two seem to be in a catching-up situation. Samsung has abandoned the FinFET structure at the 5nm stage and instead adopted IBM's Gate-All-Around (GAA) transistor technology, taking a different technological path from TSMC. Currently, the improved MBCFET with GAA technology seems to have a technological edge over TSMC's FinFET in terms of process complexity, but there is still a certain gap in manufacturing level and yield rate compared to TSMC.

Interestingly, Samsung, as a foundry, has already produced 3nm process chips, but not for mobile phone chips, but for use in cryptocurrency machines. There are reports that Samsung will mass-produce mobile chips using the second generation 3nm GAA technology in the second half of this year, which is not good news for TSMC, which has not yet adopted GAA technology in the 3nm process.

In the short term, TSMC's leading position in mobile chip foundry is difficult to shake, but it doesn't matter, as the 3nm process is far from the limit for mobile chips, leaving plenty of opportunities for both sides. In the future, we may see 2nm, 1nm, and even higher-spec chips being used in the smartphone field.

3nm will become the next main battleground for smartphones.

TSMC's N3 process includes at least five different processes to meet the specific needs of different industry customers, especially high-performance computing customers. The Apple A17 Pro uses the N3B process, while the Qualcomm Snapdragon 8 Gen4 uses the N3E process. The N3E process is more mature and has lower costs than N3B. Choosing this version, Qualcomm may not replicate the "car crash situation" of the Apple A17 Pro.

However, in any case, the 3nm process will most likely first affect the mobile phone industry. The estimated cost of the Apple A17 Pro is around $150, which is about a 36% increase from the A16 manufacturing cost. The cost increase will naturally affect the pricing of the phone. Although Apple has not raised the starting price of the iPhone 15 Pro, it is unlikely that Apple will bear this cost increase alone, and not raising the price means saving costs in other configurations, according to Apple's usual practice.

In fact, flagship Android phones also face the same problem. It's hard to say whether the Xiaomi 15 series, which is likely to be the first to be equipped with the Snapdragon 8 Gen4, will continue the pricing strategy of the previous flagship. The success of the Xiaomi 14 series relies on high performance-to-price ratio, but high performance-to-price ratio and rising costs are natural contradictions. The pricing still depends on the attitude of the phone manufacturers to compromise on profits.

The smartphone market is still in the early stages of recovery, making it difficult for manufacturers to raise prices for flagship models. It is likely that they will maintain the pricing strategy of high performance-to-price ratio from 2023, and will not let consumers bear the rising costs.

How much impact can the 3nm process have on the competition in the smartphone market? It is believed that it is difficult for anyone to give an exact answer. After all, the A17 Pro and M3, which were the first to adopt the N3B process, did not bring about a significant performance improvement, and the power consumption control did not make much progress. This inevitably raises doubts about whether chip design manufacturers really need to rush to follow the 3nm process.

In Xiaolei's view, on the one hand, the improvement in performance and power consumption of the 3nm process for smartphones is obvious, which is the direct reason for chip design manufacturers to follow suit. On the other hand, the smartphone experience is determined by a comprehensive combination of performance, system, imaging, and other aspects. The key to whether 3nm smartphones will be popular lies in how to effectively utilize the additional space created by the 3nm process for other modules.

Over the past decade, smartphones have gone through several rounds of competition in terms of performance, imaging, system, and materials. This time, 3nm will become the next main battlefield for the competition in smartphone performance. This not only represents the continuous advancement of advanced process chips, but also lays an important foundation for achieving ultimate performance and power consumption in a series of consumer electronic products such as smartphones.

3nm will not be the end point for smartphone chips, but it is definitely the main battlefield for smartphones at the current stage.