Android phone manufacturers might have to make a big decision on the pricing of their flagship models next year. According to a post on a Korean message board (via WCCFtech), the Qualcomm Snapdragon 875 Mobile Platform is going to cost $250 for each unit. The chip has an integrated Snapdragon X60 5G modem that supports both sub-6GHz and mmWave 5G signals.
Flagship Android phones could see a price hike in 2021 as chip prices rise
If the rumor is legit, and frankly we would take it with a grain of salt, the $250 price for the Snapdragon 875 is about $100 higher than the $150-$160 price of Qualcomm's current flagship, the Snapdragon 865 Mobile Platform. While the tweet isn't clear, it appears that this pricing includes a separate Snapdragon X55 5G modem that isn't integrated with the 865 but is added to it for phones that work over 5G networks.
The post goes on to say that Xiaomi, known for its value for money handsets, is in the middle of a "fierce debate" over how it will price its 2021 flagships running the Snapdragon 875 chipset. This debate isn't limited to Xiaomi as the component will be used in the majority of 2021 high-end and flagship Android phones. The new chipset will certainly be more powerful than the Snapdragon 865. The latter is produced by TSMC using its 7nm process that fits around 96.5 million transistors into a square mm. The Snapdragon 875 will also be made by TSMC but the foundry will be using its 5nm process for the first time on a Snapdragon chipset. At that process node, 171.3 million transistors can squeeze into a square mm. That is important since the higher the number of transistors inside a chip, the more powerful and energy-efficient it is.
Xiaomi is reportedly trying to keep the price of its 2021 phones down by using less expensive camera lenses. This is one of the choices that Android phone manufacturers have. They can also raise prices or keep any price increase small and eat the extra expense. Another possibility is to buy chips from another manufacturer like MediaTek whose 2020 Dimensity 1000 chip includes an integrated 5G modem.
Trying to work out a deal with Qualcomm might not be easy. The company isn't known for its largesse when it comes to pricing components for phone manufacturers. Remember, this is the company that said "No license, no chips." Last year, Judge Lucy Koh ruled in favor of the Federal Trade Commission (FTC) in a lawsuit that found the chip maker's sales policies were anti-competitive. That decision is on appeal allowing Qualcomm to continue to sell chips and ask for royalties based on the whole retail price of a phone instead of the much lower price of their components.
Keep in mind that while production of the Snapdragon 875 has supposedly started, the chip itself has yet to be formally announced; that event should take place toward the end of the year. While Xiaomi is often the first Android manufacture to use the next-generation Snapdragon chip, the Samsung Galaxy S models are usually one of the earliest international phones to use the latest flagship Snapdragon chipsets.
Pricing is going to be of major importance as world economies try to get off their feet following the global pandemic. With tens of millions of Americans unemployed, the last thing in the world that they are thinking about is buying a new phone, especially for $1,000 or more. Consumers who traditionally buy flagship phones might take a look at the mid-range market where companies like Samsung and Motorola have many feature-rich phones at very attractive prices. And both manufacturers have made sure to include large batteries and viable cameras on these handsets.