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Samsung may drop Qualcomm's Snapdragon chip in next Galaxy S phone

The Snapdragon 810 chip, which was created for high-end phones, overheated in testing, Bloomberg reports.

Samsung's Galaxy S5, which was released last year with a Snapdragon chip inside. CNET

Samsung may be planning to dump Qualcomm's processor from its next Galaxy S flagship smartphone, opting to use its own Exynos chips instead.

Bloomberg reported Wednesday that Samsung, the world's biggest smartphone maker, won't be using the Snapdragon 810 chip from Qualcomm, the world's biggest maker of smartphone chips, in the new device due to the processor overheating during Samsung's testing. Samsung is widely predicted to unveil a new Galaxy S phone at the Mobile World Congress show in March.

The article cited unnamed sources with direct knowledge of the matter. Representatives from both Qualcomm and Samsung declined to comment.

If the report is accurate, the change could be a significant blow to Qualcomm, with the potential of losing a high-profile design win in a flagship Samsung phone. Such a Samsung decision could then make it harder for Qualcomm to sell the new 810 chip, which was made for use in high-end mobile devices, just as Qualcomm is starting to market it. The report also comes at a difficult time for Qualcomm, with the company's stock already depressed amid a long-standing anti-monopoly investigation in China.

Qualcomm has faced some questions in recent months about potential overheating in the 810, though the company has generally waved away those claims and said it's been moving forward with selling the new chip. So far, the Snapdragon 810 will be included in LG's G Flex 2 and Xiaomi's Mi Note Pro smartphones.

Along with making phones, TVs and other electronics, Samsung is the second-largest maker of computer chips in the world, and it's making a bigger push with its chip line, called Exynos. It uses those chips in its phones in some regions already, though usually puts Snapdragon chips in its phones sold in the US.

Given that Samsung already uses both Snapdragon and Exynos chips in variations of its flagship phones, Cowen analyst Timothy Arcuri questioned whether Bloomberg's report was actually providing new information. He said in a report to clients Wednesday that it was unlikely Samsung would pull Snapdragon's chips out of all Galaxy S phones, saying such an move would be a major undertaking for Samsung. Losing all the new Galaxy S line would affect 3 to 4 percent of Qualcomm's total annual chip shipments, Cowen estimated.

Cowen believes Qualcomm has already solved the 810's overheating problems, but production is now two to three months behind schedule, Arcuri said.

Qualcomm and Samsung have been close partners for years, with Samsung using Snapdragon chips in many of its flagship phones, including the Galaxy S5 and Galaxy Note 4, as well as the Galaxy Alpha, which were all released last year.

Shares of Qualcomm were down more than 2 percent premarket, but have since bounced back and are trading close to flat at midday.

Updated at 9 a.m. PT: Added analyst's comments and updated stock movement.