Samsung Electronics announced on Thursday that it will be producing Qualcomm’s new Snapdragon 820 processors for mobile devices, boosting the odds that the new Qualcomm chips could end up in South Korean giant’s high-end smartphones.

On Thursday, Samsung said in a presser that it had started large-scale production of logic chips using its 14-nanometer LPP (Low-Power Plus) process, which the firm uses to manufacture its own Exynos 8 Octa processor. It was noted at the press conference that thehe Qualcomm Snapdragon 820 processor also requires the 14nm LPP process, and is expected to be show up in devices by the second quarter of 2016.

Statement from Qualcomm

In an email statement, a spokesperson for Qualcomm noted that the firm has always used a variety of fab suppliers and that this business model will continue: “Our decision to choose a specific process technology is based on its ability to meet our design goals for performance, power efficiency and yield.”

Samsung would not comment on whether the Snapdragon processor would be included in the firm’s new phones including the soon-to-be-launched flagship Galaxy S7. Rumors about the new high-end device, set to be announced at the Mobile World Congress in Barcelona in February, have hinted it could be powered by the Snapdragon 820.

 

Samsung To Make Qualcomm Snapdragon 820 ChipsPerspective on Samsung announcement from analyst Patrick Moorhead

According to Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, the announcement of a chip fabrication deal does not necessarily mean Samsung will be using the Qualcomm chips in the new Galaxy S7. Moorhead noted in an email message that the Korean firm tends to keep their businesses disconnected, and the mobile and semiconductor lines are clearly separated. “Therefore, I don’t believe that the fact the 820 is built by Samsung increases its chances of being in the SGS7,” he continued to note.

Qualcomm lost a good chunk of business a couple of years ago when the electronics titan went with its its in-house Exynos processor instead of the Snapdragon 810 chip in its premium Samsung Galaxy S6 and S6 Edge phones.

Of note, the chip maker commented last April that it did not anticipate a near-term change in its components in Samsung’s premium devices, and reduced its full-year 2015 its revenue guidance.

Despite this, Moorhead said Samsung is likely to switch back to Qualcomm because because the new 820 simply offers better performance than the Exynos. “I do believe Samsung must use the 820 to be more competitive with Apple. 820 hits performance per watt levels Exynos just can’t hit.”